AUGUST 2014 A JOURNAL BY AND FOR DAIMLER FINANCIAL SERVICES BIG. data

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1 AUGUST 2014 A JOURNAL BY AND FOR DAIMLER FINANCIAL SERVICES BIG data 4 6 The power of data Whether it s the creditworthiness of a bank s customers or the networking of cars for insurance purposes, the tracks we leave behind us every day in the Web are also becoming increasingly valuable to providers of financial services The force of habit In many parts of China, people still pay cash for all of their purchases, and financial services are practically unknown. Certain prerequisites must be met before DFS can establish its financing products and hire the right employees for its business operations.

2 2 AUGUST 2014 Financial INSIGHTS LETTER FROM THE EDITOR Dear readers, Vacation at last! And where are you planning to go this year? You don t know yet? Well, you re in luck. The friendly employees at the travel agency already know the perfect travel destination for you, including the right schedule and your family s individual hobbies without resorting to tarot cards or a crystal ball. Are you skeptical? Predictive analytics in other words, the large-scale collection of online data make this possible, at least in theory. On pages 4 to 6, you can find out why your online information leaves deeper tracks than your feet could ever do in the sandy beach of your dreams. Pleasant reading! The editorial team

3 Financial INSIGHTS AUGUST CONTENTS By land and by water. >> Pages 8 10 Wallenius Wilhelmsen Logistics transports everything that rolls to destinations all over the world. That s why this company keeps its truck fleet ever young thanks to Daimler Financial Services and CharterWay. 02 Letter from the editor 03 Table of contents 04 Spotlight: Big Data Collecting data is becoming essential for financial services providers too. 06 Opinion: Pro & con Brave new data world. 07 Did you know? 60 seconds for asset-backed securities. 08 Customers: Wallenius Wilhelmsen Logistics. 11 Quarterly result: An excellent second quarter for DFS. 12 Cash customers: New business in China having the right employees is crucial. 14 Major project, Part 2: Nexus three in one. The right attitude convinces customers. >>Pages Many Chinese customers believe that Cash is king. In order to persuade them that leasing and financing are also good options, we need not only the right marketing strategy but also the right employees. 16 DFS up close: Dae Oh, the dancing contract manager in Korea. 17 Birthday: Daimler Truck Financial turns Global village: A visit to Sweden. 19 News from around the world 20 New model: The C-Class Estate from Mercedes-Benz. 22 This and that: A plea for courageous individuality questions for... Dieter Buhl talks about women s handball. A gala birthday for Daimler Truck Financial. >> Page 17 A lot has changed in the past four decades, but one thing has remained the same: customer-friendliness and strong partnerships are still the foundation of business operations at Daimler Truck Financial.

4 4 AUGUST 2014 Financial INSIGHTS SPOTLIGHT I know what you did next Everything you always wanted to know about big data and why Predictive Analytics become increasingly important for Daimler Financial Services. Michael T. is completely amazed. He ordered a new pair of running shoes on the Internet only a few hours ago, but already the doorbell is ringing and outside there s a delivery man holding a package with the sneakers under his arm. What may sound like science fiction to many is already possible today. At the beginning of this year, for example, the online retailer Amazon patented a procedure known as anticipatory shipping that involves sending merchandise to customers before they actually order it. Digital traces This type of business model is made possible by big-data systems technologies that use mathematical calculations to derive probabilities from huge amounts of information. The ingredients for this recipe consist of all the information we as consumers leave behind every day on Facebook and Google, in supermarkets with our discount cards, and in the sensors and apps in our smartphones. When such data is bundled and analyzed, all of these supposedly unconnected bits of information can yield surprisingly accurate predictions about our future behavior. These predictive analytics are worth their weight in gold for businesses, since they can be used to precisely align products and services with the individual wishes of customers. For example, Amazon uses systems that register how long customers keep the cursor on a certain product, and also whether or Big data everywhere: Smartphone data can be used to predict our future location. The information we leave with our product search on the internet can be used to calculate the likelihood that we will order a specific product. not they read product reviews. This information can be used to calculate the likelihood that a customer will order a specific product. If the system determines that a customer can be expected to order a product, the merchandise will be packed and sent to a logistics center near the customer s home. Retailers and telecommunication companies are the pioneers of the new world of big data. The U.S. retailer Walmart, for example, examines its customers social network contacts. It then uses this information to offer customers gift recommendations for a friend s birthday. The music industry also relies on big data. Record companies that participate in the Spotify music streaming service collect data about the people who listen to their songs in order to identify the cities in which their musicians enjoy the greatest popularity. They then schedule concert locations accordingly. The online TV series House of Cards is also based on data analysis. The producers of this political thriller used data about the popularity of certain actors to make their casting decisions and also collected information about topics of interest to potential viewers. This approach was very successful and resulted in record ratings for the series. Manhunt 2.0 The significance of big data extends far beyond business and commercial interests. For example, police departments in some American cities use big data to determine in which neighborhoods crimes are likely to be committed at which times of day. Such predictive policing has led to an approximately 30 percent decrease in crime in Memphis, Tennessee. Smartphone data can actually be used to predict the future location of a phone s owner. Here the combination of GPS data and the information stored in a phone (call lists, phone books, etc.) can be fed into a program that will then calculate where a person might be in a week, or even a year. If data from that person s social network friends is also available, the resulting prediction can be narrowed down to three meters. In view of these developments, experts have begun talking about the end of coincidence and with good reason. For example, we ve already grown accustomed to the fact that when we use Google, the search engine will automatically complete our question even before we finish typing the first word.

5 SPOTLIGHT Financial INSIGHTS AUGUST summer! Big data is also changing the way Daimler Financial Services conducts its vehicle financing business operations. Today it s no longer possible to imagine the financial services sector or the automotive industry without predictive analytics. In the financial services sector, startup companies such as Kreditech (see box) are already adopting completely new approaches to assessing consumers creditworthiness. Automobiles are becoming more and more networked practically every day, and in the process they are being transformed into data collectors on wheels. By the time the EU regulation for the new ecall* feature goes into effect in October 2015, automobiles in Europe will have become data generators. According to the British consulting firm Machina Research, nine out of ten vehicles will probably be networked by the end of this decade. By contrast, only ten percent of all vehicles have such connectivity features today. A global survey conducted by the Gartner market research company found that far more than half of the insurance companies surveyed have already invested in the expansion of big-data technology. Big Data as success factor The proper use and administration of big data will therefore become a key factor of success at Daimler Financial Services as well. As a result, the company is actively addressing the issue. The idea Using DFS Smartly was submitted to the myidea. platform back in The goal behind the concept is to link data and then analyze it to develop attractive solutions for our customers. Using DFS Smartly has since then led to the creation of the Business Analytics project. Within the framework of this project, several million data sets that include demographic and financial information about European markets and market segments have already been bundled together in Europe. The intelligent use of this data leads to a better understanding of customers needs, and this information can in turn be used to create customized products and services. During recent months, a team has been commissioned by the Board of Management to examine the further opportunities and potential offered by big data. For example, big data concerning driving styles could lead to the creation of completely new car insurance models. Telematics systems can enable insurance companies to offer discounts to drivers who operate their vehicles safely, says Dr. Ingo Telschow, Managing Director of Daimler Insurance Services GmbH. As a result, rates could also be matched more accurately to the actual risk associated with each driver. The type of Group-wide data management system Daimler ultimately implements will play a decisive role in future developments. After all, customer data is generated not only at DFS but also at many other Group divisions. That s one of the reasons why DFS activities in this area are linked as closely as possible with those of the brand partner. For example, DFS has been involved in the Finance me and Move me systems at the Mercedes.me online portal from the very beginning. Data security and protection are also being actively addressed, since customer acceptance of big-data applications requires complete trust in the way the company manages its data. Example: Kreditech One company that is using big data very successfuly is the Hamburg-based Kreditech mini-credit platform. This platform offers an alternative to the established Schufa credit rating agency by calculating the creditworthiness of applicants on the basis of its own social scoring system. The concept is very simple. The more data that is available about a customer, the more accurate will be the prediction of that person s future payment history and the more precise will be the calculation of the appropriate credit line. The social scoring system utilizes data from evaluations (e.g. ebay), business portals and Facebook. Kreditech also collects and assesses information about the hardware used by applicants to submit their application (e.g. ipad, desktop computer), how much time it takes them to fill out the application form, and the number of times they hit the backspace button or make mistakes. The company processes up to 8,000 individual bits of information in this manner before making a credit decision. The potential of this startup is huge; the company has already taken in several million euros from interested investors in the initial rounds of venture capital financing. *ecall (emergency call) In the event of a serious accident, the vehicle(s) involved will automatically send location data to an emergency call center via satellite and also establish a telephone connection with a call center operator. An EU regulation stipulates the mandatory installation of an ecall system in all new passenger cars and light trucks beginning in October 2015.

6 6 AUGUST 2014 Financial INSIGHTS SPOTLIGHT Brave new data world George Orwell saw it coming more than 60 years ago, when he famously described it in his novel We are being watched without even knowing it, more often than not. The data collected about us opens up huge opportunities. Blessing or curse? Consider the following two opinions. Pro Data, data everyone s always talking about data and Big Brother. I ve been collecting shopping bonus points for years now. What s the big deal? What do you think they ve been doing with all that information about what I buy and when? Do you know what I think? They re not doing much with it. I haven t noticed anything, anyhow. What I have noticed, however, is that my bonus points have given me several rewards. And even if companies send me unsolicited customized offers generated on the basis of the traces I leave behind on the Web or anywhere else who cares? If such offers are tailored to my preferences, they not only save me time and money, they also save money for the companies that can now optimize their products faster in line with my needs. And I just don t buy the argument that my data could be hijacked by criminals. In my opinion, I ve got a better chance of having a soccer ball land on my head in a fully occupied stadium. I ve got nothing to hide, and people who are up to no good are being caught much more often these days. Let s admit it: In the end, data is just data. It certainly doesn t change my personality. Con You might remember that several years ago there were protests against video surveillance on public streets and that the demonstrations were unsuccessful. Our images are stored even if we re not pickpockets, and the number of cameras out there is growing under the pretext that they are needed to fight crime. Even more disturbing is the fact that every click we make on the Web is stored somewhere out there in the giant data world. When I use my ATM card, the process is not only recorded but also interpreted and when I use the card in a store, I give out all kinds of information about my consumption habits. It s crazy! I haven t done anything wrong and that makes my privacy even more important to me. It s also not too difficult for unauthorized third parties to access my data and use my identity to do whatever they want to on the Web. Where do you think all this collection of data is leading to? Exactly! We re already at the mercy of nearly automated processes, which means it s becoming possible to control and manipulate us. Science fiction is becoming a frightening reality.

7 ECONOMY & BUSINESS Financial INSIGHTS AUGUST seconds for Asset-backed Securities Because Daimler Financial Services supports the Group s model offensive, it will finance or lease even more cars and commercial vehicles in the future. DFS expects to greatly increase its contract volume in the years ahead. However, this also poses a challenge, because the money DFS lends to customers must first borrowed from someone else. To do this, Daimler takes out loans for DFS from banks and issues bonds. In Germany, Mercedes-Benz Bank helps to refinance DFS by offering investment opportunities for private customers. Recently DFS has also been increasingly focusing on another refinancing tool: asset-backed securities (ABS). But what are they exactly? Asset-backed securities are receivables (such as those from ongoing financing contracts) that are sold to a company that has been established expressly for this purpose. The company converts these assets into securities, which it then sells to major investors such as insurance companies and money-market funds. During the term of the securities, the investors are not only paid interest on the capital they provided but also get their investment back in monthly installments. The main advantage of ABS for DFS is that whereas income from existing leasing or financing contracts is normally earned over an extended period of time, asset-backed securities immediately provide the company with lots of cash, which it can use as a basis for financing new business and thus for additional growth. A further advantage of asset-backed securities is that their terms are generally more favorable for DFS than is the case with conventional bank loans. However, a lot of work is needed to create the infrastructure for the sale of the assets and for regular reporting to the investors. ABS are used in many different sectors for example, credit card companies sell their receivables, and soccer clubs sell their future stadium income. Daimler Financial Services is already using ABS in Germany, Canada and the U.S. For example, Mercedes- Benz Bank s Silver Arrow 4 ABS deal resulted in the quick availability of 1 billion, which was realized from the sale of loan contract receivables at the end of As part of its growth strategy, DFS might employ this instrument in additional countries in the future. ABS are particularly appealing in economically difficult times, when other means of obtaining money, such as bank loans and bonds, are associated with high costs.

8 8 AUGUST 2014 Financial INSIGHTS ECONOMY & BUSINESS Piggyback Whenever Siegfried Krause crosses the Rhine River at the Iffezheim barrage near Baden-Baden, he feels he is returning to his second homeland. I travel through France all the time. Sometimes I know more about the weather along the Côte d Azur than about the weather outside my own home, says Krause, a truck driver from Bretten in Baden-Württemberg, with a smile. As he talks, his Actros 1848 passes the first French street signs. Krause has three ex works tractors securely tied down on his semitrailer. Krause is one of the approximately 5,700 employees of Wallenius Wilhelmsen Logistics. The present company is the result of the fusion of two Scandinavian shipping lines in Its core business is the provision of global transport and logistics solutions for manufacturers of cars, commercial vehicles, buses, and construction and agricultural machines. Its customers include almost all vehicle manufacturers, as well as car rental companies and operators of large vehicle fleets. In 2013 the company transported approximately six million vehicles in all. Wallenius Wilhelmsen has a fleet of roll-on/roll-off ships for intercontinental transportation. We manage the transshipment via our own 11 terminals, says Konrad Kurz, the company s Vice President responsible for the operation of the terminals and for land transportation via trains and trucks in the Europe business region. We use approximately 310 trucks in Europe alone, says Michael Berblinger, Director Transport & Logistics. The interview with these two managers is held in Ötigheim, Baden-Württemberg, from where half of the company s trucks in Europe are dispatched. The trucks often transport goods from a plant to a dealer. For example, Siegfried Krause loaded the tractors at their manufacturer in Mannheim and is bringing them to agricultural machinery dealers in Alsace-Lorraine. Other truck routes take goods to or from ships for transshipment, says Berblinger. Trucks from Germany often come to our terminal in Zeebrugge, Belgium, he says. For their return trip, they load vehicles that have been brought to the terminal by ship. Wallenius Wilhelmsen also provides technical services for many manufacturers. That includes initial inspections of ex works vehicles or small alterations made before vehicles are exported to certain countries, for example, Kurz explains. This kind of work is done at processing centers, which are located either in the terminals or on the manufacturers premises. In some cases the processing centers are located on independent sites, and that requires additional transport. This wide variety of tasks means that the fleet has to be administered with maximum efficiency. One of the ways Wallenius Wilhelmsen achieves this degree of efficiency >> From cars to agricultural machinery: Wallenius Wilhelmsen transports vehicles of all kinds and sizes shown here are vehicles being carried from the Mannheim plant to dealers in Alsace. France is his second home: Siegfried Krause mainly delivers goods to customers in France, and he is often on the road for days on end. New Actros tractor: WalleniusWilhelmsen employs more than 300 trucks in Europe most of them bear the Mercedes star.

9 ECONOMY & BUSINESS Financial INSIGHTS AUGUST Wallenius Wilhelmsen Logistics transports everything that rolls on ships and trucks, and with a great deal of logistical effort. So it s very important for this services provider to keep the administration of its truck fleet lean thanks to Daimler Financial Services and CharterWay.

10 10 AUGUST 2014 Financial INSIGHTS ECONOMY & BUSINESS is thanks to its cooperation with Mercedes-Benz Bank. Trucks bearing the Mercedes star make up the major part of the company s fleet, and for years now all of them have been procured with the help of Daimler Financial Services (DFS). Flexibility is especially important for us, and we ve got it with DFS, says Kurz. He s referring to the various procurement models that are available to DFS customers and to the flexible structuring of contracts, especially their duration. Last year Wallenius Wilhelmsen used leasing contracts to integrate almost 40 new Actros tractor-trailers and car transporters all of them equipped with Euro VI engines into its fleets in Germany and Poland. For a fleet that is distributed across several countries, we have the advantage of operating internationally through our national subsidiaries, says Fritz- Martin Hüttemann, a leasing and financing advisor at Mercedes-Benz Bank who has been working together for years with the decision-makers at Wallenius Wilhelmsen. The company also relies on Mercedes-Benz for maintenance and repairs, and it uses CharterWay Service Complete for all of its trucks. We keep our fleet young. At the moment, the average age of our trucks is 1.7 years, and we resell our trucks after five years at the most, Berblinger explains. This policy reduces the number of days the trucks spend at the workshop, and the trucks high quality is maintained. If there is ever a problem, we can depend on the dense network of Mercedes-Benz workshops, he adds. The network stretches throughout Europe, and that is very reassuring for Siegfried Krause and his colleagues, whether they re working on the Côte d Azur or somewhere else on the continent. An experienced team: Michael Berblinger and Konrad Kurz from Wallenius Wilhelmsen Logistics with their advisor Fritz-Martin Hüttemann from Mercedes-Benz Bank (left to right). The Wallenius Wilhelmsen company s fleet comprises 60 ships of its own. It has access to a further 70 ships thanks to a holding in another company.

11 ECONOMY & BUSINESS Financial INSIGHTS AUGUST Further growth In the second quarter of 2014, new business at DFS grew by 12% compared to the same period of last year. In the second quarter, Daimler Financial Services concluded around 328,000 new leasing and financing contracts worth a total of 11.5 billion. As a result, the company s new business rose by 12% compared to the same period of last year. Contract volume reached 88.1 billion at the end of June, representing a 5% increase on the figure at the end of EBIT amounted to 336 million (Q2 2013: 319 million). In Europe, DFS concluded around 181,000 new leasing and financing contracts worth a total of 5.6 billion a 9% increase on the same quarter of last year. In Germany, new business rose to 2.7 billion (+4%) at Mercedes-Benz Bank, and the volume of deposits in the direct banking business amounted to 11.2 billion (-1%). Contract volume reached 38.6 billion in Europe at the end of June, representing an increase of 4% compared to the end of In the Americas, DFS boosted its new business by 10% to 4.2 billion. In the U.S., this figure rose by 16%. Contract volume in the region amounted to 36.6 billion, an increase of 6% over the level reached at the end of last year. New business rose by 28% to 1.7 billion in the Africa & Asia/Pacific region. In China, Business development Q (30.06.) New business (in millions of ) + 12% 11,515 10, Contract volume (in millions of ) +8% 88,084 81, EBIT (in millions of ) +5% the company more than doubled the value of its newly concluded financing and leasing contracts, increasing their volume by 140% compared to the second quarter of The AAP region s contract volume amounted to 12.7 billion at the end of June, and was thus 10% higher than at the end of In the insurance business, DFS brokered 1% more vehicle-linked policies in the second quarter than in the same period of last year. During this period, the company concluded around 340,000 insurance contracts worldwide. In the second quarter, the flexible mobility concept car2go was launched in Florence, Italy, and in South Bay, Los Angeles County. At the end of May car2go withdrew from its two British locations, London and Birmingham. As a result, car2go was represented in 26 cities at the end of June. car2go had 780,000 customers worldwide at the end of the second quarter an increase of more than 30% since the end of Digital wave of success mymbfs App reaches milestone of 100,000 downloads. Daimler Financial Services Africa & Asia Pacific has reached an important milestone with over 100,000 downloads of the popular mymbfs App to date. The mymbfs App allows users to locate the nearest Mercedes-Benz dealer, contact a customer service representative, determine a monthly payment amount on a Mercedes-Benz of their choice and see current promotions from DFS AAP. Another key achievement was the near 250,000 unique visitors to the industry-leading Financial Calculator in just over five months. The mobile device-friendly calculators allow users to easily browse vehicles of their choice and find out the monthly finance or leasing rate all at the tip of their fingers. Looking forward, DFS will continue to enhance its digital offerings. Plans to integrate the mymbfs App with online account management are currently being rolled out across the region. This will give existing customers the added ability to manage their automotive financing in a secure manner from any smartphone or tablet device.

12 12 AUGUST 2014 Financial INSIGHTS ECONOMY & BUSINESS The right people with the right mindset In the automotive industry, you cannot say growth without saying China. China is a market of 1.3 billion people that has seen luxury vehicle sales increase more than tenfold in the past 10 years. With future predictions only seeing this development continuing, managing this growth will be the key to being successful in China. Today, everyone at Daimler knows the importance of China. In the past ten years alone, Daimler s passenger car sales grew from just over 8,000 to more than 200,000 per year. If this growth continues China is set to become the largest vehicle sales market in the world for Daimler. The story is similar when it comes to Financial Services: Between 2006 and 2013, the portfolio in China increased from 81 million euros to 2.6 billion euros, making it the sixth largest market for DFS. This growth not only creates tremendous opportunities for our business. It also brings a unique set of challenges, says Alexandre Mallmann, President and CEO of Mercedes-Benz Auto Finance Limited. One of these challenges is trying to change customers buying preferences. Traditionally, China has been an ownership market where customers prefer to pay cash. As

13 ECONOMY & BUSINESS Financial INSIGHTS AUGUST the market grows, customers are becoming more open to financing with a preference toward retail financing solutions that focus on ownership. This is why leasing is a relatively new concept in China. In fact, two years ago it was MBAFC that became the first auto finance company in China to launch a dedicated leasing company (Mercedes-Benz Leasing Company). This year they became the first auto finance company to launch a nationwide leasing product called Agility that gives customers the option to either purchase, trade-in or return their vehicle at contract end. With credit acceptance increasing among the younger generation, it allows us to introduce new and innovative financing products like Agility, says Mallmann. But we know this way of financing is a new concept for our customers and dealers so we need to take extra time and effort to educate them so they understand the benefits of a product that does not always end with owning the vehicle. Trying to change an entire population s way of thinking about vehicle financing is no easy task. But by introducing a game changing way of financing vehicles, MBAFC hopes to capitalize on the younger customers and open up financing to an entire new market of customers. Obviously, it takes a great team to manage this growth while continuing to meet customer needs. As Alexandre Mallmann puts it: I am a strong believer in having the right person in the right position with the right mindset. But the auto finance industry in China is still young and it is growing quickly. Ten years ago, there were only a handful of auto finance companies in China today, there are more than double, plus increased competition from banks and other financial institutions. All that means that the competition for talent is increasing and finding the right people with the right education and work experience is not as easy as in a market where financial services have been around for many years. As a result, the workforce at MBAFC is very diverse: On the one hand, there are local Chinese employees who, like the market, are relatively new to the auto financing business, but who are eager and willing to lead the change with passion and local insights. On the other hand, there are foreigners from ten different MBAFC became the first auto finance company in China to launch a dedicated leasing company. Aim is to open up financing to an entire new market of customers with innovative leasing and financing products. countries who offer experience from other markets that support managing the challenges that come from developing an emerging market into a mature one. Accordingly, there is a strong emphasis on team development at MBAFC. Many initiatives have been introduced to ensure they are retaining and developing their top talents as they prepare to become one of the top markets in the world for DFS. It is important that we all work together to create a common mindset. We need to appreciate our differences and use them to come together as one team to achieve great results, says Mallmann

14 14 AUGUST 2014 Financial INSIGHTS ECONOMY & BUSINESS From green screens to benchmark technology Reducing complexity increasing flexibility: In the second part of our series, you ll find out how the Americas region of Daimler Financial Services is meeting this challenge with the Nexus program, which has just successfully entered its first implementation phase. In Daimler Financial Services (DFS) Americas region, the Nexus project has been a major undertaking for the past two years. Nexus was launched to transform the way that the contract management business is conducted in the U.S. and Canada by combining three portfolio systems into one. On June 2, the first of three portfolio systems was successfully replaced with ALFA, the new system. Nexus Phase 1 facts Why the replacement? There is a clear need to replace and consolidate contract management processes and tools. The current IT landscape is a legacy infrastructure from the de-merger and continues to be a challenge with greater complexity and outdated technology. This will continue to hamper the realization of an ideal state through the optimization of business processes and systems. Only a modern, integrated contract management solution will provide a cost-effective and sustainable IT platform that also delivers long-term benefits for DFS and its customers. What ALFA provides Nexus team 140 members 83,753 Migrated contracts from InfoLease to ALFA This system consolidation enables the company to increase its competitive advantage while enhancing dealer, customer and employee satisfaction. It is a blueprint for operational excellence and a significant part of the DFS 2020 Strategy. Nexus is changing our landscape, driving us forward and ultimately laying the foundation to launch new business, support new products and design new processes, says Udo Neumann, Chief Information Officer, DFS Americas. ALFA is a state-of-the-art system that will transform our business, our transactions with our dealers and customers and, in the long term, improve the customer experience , Impacted interfacing systems Test cases completed during user acceptance testing Red Bull Energy Drinks consumed over launch weekend

15 ECONOMY & BUSINESS Financial INSIGHTS AUGUST The project partner During the vendor and system selection process, CHP Consulting was evaluated. Their product, ALFA, best fit both functional and technical requirements. CHP, which is based in London, England, relocated a team of 15 consultants to Farmington Hills, Michigan. The core team sat side-by-side the DFS team, living and breathing the Nexus project, from concept to Phase 1 launch. They continue to work with the DFS team to prepare for Phase 2. The launch The Phase 1 launch of Nexus marked the culmination of many years of planning, design and development, going from blueprints to a live, fully functioning operating system. The effort it took to replace the first contract management system was a massive one. Not only did more than 1,600 business requirements need to be met, but for Phase 1 alone, 33 additional systems had to connect and interact with ALFA. Throughout Phase 1 implementation, a tremendous amount of effort was put into ensuring that ALFA was ready to roll on day one. There were several issues around performance and stability that members of the team had to work hard to overcome. User-interface testing teams spent many long hours, days, nights and weekends testing different generations of the system to identify the issues. Working through the issues became a study in teamwork between the business and operations teams, IT and the CHP colleagues. Next phase Like with any significant technology investment and implementation, the transition has just begun. The Nexus team continues to work through open items that have been identified during the ongoing adoption of ALFA. They are saying goodbye to some team members, who are being re-integrated back into their business functions, while welcoming new colleagues who are in the process of planning for Phase 2: Passenger Car contract management systems. There were many lessons learned from Phase 1 and the expectation is that they will be captured in an effort to clear the way for an even smoother Phase 2 delivery. Nexus Phase 1 Nexus Phase 2 InfoLease CARS LeMans There was a genuine spirit of collaboration that reflected the Nexus culture, one we all worked very hard to create, said Rodolfo Dominguez, Director, Enterprise Portfolio Management and Nexus Program. Being thoughtful, respectful and overcoming challenges together became the glue that connected us, driving us to succeed as a unified unit. 9 Web-based courses offered 262 Participants completing the web-based courses 8 Instructor-led courses offered 241 Participants completing the Instructor-led courses 35 x 7 x On-the-ground support: After ALFA s initial launch, 35 ALFA subject-matter experts, easily found in their orange team jerseys, and seven business-area experts, donning red polo shirts, were available at each location to support with colleagues questions and concerns.

16 16 AUGUST 2014 Financial INSIGHTS NEWS FROM AROUND THE WORLD Greetings from... Sweden Sweden Capital: Stockholm Population: 9.6 million National Language: Swedish Area: 449,964 square kilometers Form of Government: Unitary parliamentary, constitutional monarchy Stockholm Interesting facts about the country, its people and our business Weronika Duvén works as a controller and project specialist in the controlling department at Mercedes-Benz Financial Services Sweden. She joined the company in Currency: 9.18 Swedish Krona (SEK) = 1 EUR = 1.37 USD Gross domestic product per capita: 43,936 EUR / 60,020 USD (2013) National holiday: June 6 (National Day of Sweden) Weronika, what is it like to work for MBFS in Malmö? We are currently 65 colleagues from Sweden and Denmark our company serves those two markets, but we are working on a Nordic concept to offer financial services to cross-border customers whom are also operating in Finland and Norway. As we have colleagues not only from Scandinavia but several different countries, our office is quite international. Furthermore, we share the building with our brand partner. I like the close cooperation with our MPC fellows. And I love the view from my office we can see the ocean from here. Danish and Swedish colleagues under one roof how does that work? Malmö and Copenhagen are closely together, so our Danish colleagues can come over the bridge easily every day. How is business developing at MBFS Sweden & Denmark? Business is currently going great in Sweden. We almost reached our target for 2014 already and never had such a high portfolio above 460 million euro. We can also see a positive development in Denmark as the portfolio is growing. Of course, we are two different markets with separate divisions, but we have a combined reporting. So we can equalize our business results and every country can contribute to achieve our combined targets. Do you have special traditions in your office? Yes, we eat a lot of cake at work. A Danish tradition is to bring sweets or cakes to the office before a colleague goes on vacation. As someone is always leaving for vacation we have cake or sweets in the office all the time. Is it true that Midsommar is the most popular celebration in Sweden? Definitely! For some people it s even more popular than Christmas. Everybody is celebrating it, and shops are closed for two days. It s all about singing and dancing around a pole, eating lots of strawberries, new potatoes and herring and drinking several snaps, of course. Summer officially starts with the celebration, school is out and people go on vacation. What attractions would you recommend to people who are visiting Malmö? Well, Malmö is located at the sea, so we have lots of water around us, even in the old city center. It s surrounded by a canal and has very pretty historic buildings. Several attractions are nearby. For example, you can walk from the beach to the old city. What you might not have heard is that we have the highest building in whole Scandinavia the Turning Torso from where you can see the whole city including Copenhagen.

17 NEWS FROM AROUND THE WORLD Financial INSIGHTS AUGUST DTF celebrates 40 years This year marks 40 years in the trucking industry for Daimler Truck Financial (DTF) in the U.S. Though change has been a constant during four decades in the business, the foundations of customer focus and strong partnerships have remained the same. It s this focus that has contributed to long-term success for DTF, its dealers and customers. From the beginning, our mission has been to support Daimler Trucks North America s sales and dealer network, and to be the first-choice provider of financial products and services, as well as a true partner to our dealers and customers across all segments, explained Victor Calderon, Vice President of DTF Sales, Marketing and Remarketing. Freightliner Credit Corporation opened in Portland, Oregon, in 1974 with a small number of employees and contracts. Today, the company has a portfolio of over 9 billion dollars and upwards of 200 employees serving a customer base of more than 500 dealers and 27,000 customers. The growth can be attributed to DTF s continuous alignment of strategies with its various dealers, customers and brand partners, as well as strong ongoing process improvements. Both customers and dealers indicate these improvements have made a difference. In 2013 DTF s Customer Service Index results were 93.2, up 2.7 points from Dealer Service Index results also improved to 92, up 1.6 points. These are the highest ever satisfaction scores since starting these surveys 12 years ago. Doug Austin, President and Dealer Principal of New York Freightliner, who also started in the business in 1974, can attest to the value of partnering with DTF. His dealership, also known as Diehl and Sons, was founded in 1889 and originally specialized in the manufacture of horse-drawn wagons. The Austin family acquired what evolved into a full-service truck dealership in 1963 and has partnered with DTF for 30 years. The DTF team has been a phenomenal partner, explained Austin. They ve stuck by us and our customers during good times and bad and we really couldn t do what we do without their support. Austin noted that his customers, who are more educated about finance options in the age of information technology, are looking for ease of financing, flexibility and good rates. DTF has made great efforts over the years to meet our customers needs. It s a partnership we hope to maintain as long as we are in business. Ray Harlin, President and Chief Financial Officer of U.S. Express, the nation s second-largest privately-owned truckload carrier, echoed these sentiments. The company has partnered with DTF since We ve grown from 50 trucks back in 1986 to over 6,000 and DTF s efficiency, industry knowledge and understanding of our financial needs has made all the difference over the years, noted Harlin. They ve made financing available to us even during tough economic times and have been solid partners. He added that the company has helped U.S. Express execute and sometimes finance key acquisitions, and has remained flexible as the company has grown. The quality of the people we deal with at DTF and the service and support they have provided to us for many years has simply been outstanding. Though just a snapshot of the customers and dealers DTF supports, partnerships like these can be attributed to the dedicated employees who support the business every day. Whether in the Business Center or out in the field, their ability to build relationships and understand the unique needs of each customer, continues to set DTF apart from the competition. Our success is a credit to our partners the dealers, customers and sales colleagues with whom we have worked side by side to grow the business together, noted Juergen Rochert, Vice President and head of DTF. But it is equally a credit to the exceptional dedication and hard work of our employees. I want to sincerely congratulate the entire team for 40 fantastic years. We look forward to the next 40 years of challenges and fun.

18 18 AUGUST 2014 Financial INSIGHTS NEWS FROM AROUND THE WORLD DFS is one of Europe s top employers Daimler Financial Services is one of the 25 best multinational employers in Europe the company received a certification of that from the Great Place to Work Institute in Rome on June 6, After the presentation of the award, Franz Reiner, the DFS Board member responsible for the Europe region, said, I am very proud of this award. It confirms that our employees work for our company with great commitment and have tremendous faith in their employer. The renowned competition to find Europe s Best Employer was held for the twelfth time in a row. A total of 2,330 companies from all sectors, of all sizes, and in all the regions of Europe participated. In this benchmark competition, the quality and appeal of the competing companies workplace culture are examined and evaluated. Europe live and in color It was the Europe region s top event of the year. For the first time in the history of DFS, Franz Reiner, CEO of Mercedes-Benz Bank and Board of Management Member for the Europe region, brought all of the region s national subsidiaries together for a joint video town hall meeting. The technology was very sophisticated, and the atmosphere and the mood were simply stunning. For a long time, Franz Reiner had dreamed of giving his vision of ONE Europe a more tangible form so that it could be directly experienced by all of the region s 4,000 employees. His dream became a reality on June 26, when Reiner brought the colleagues from all of his markets together for a joint town hall meeting. Although the employees were not all in the same place, the event was streamed live and in color. 21 countries, 23 locations, 24 live streams A video camera recorded the activities in Stuttgart. Every country transmitted a still picture of itself back to Stuttgart, where the editors combined all of the images into a huge mosaic. They were streamed live over the Internet to 23 locations throughout Europe so that all of the colleagues could watch the events unfold on large screens. The colleagues in the various countries waved colorful flags and were all certain of victory. In the run-up to the event, Franz Reiner got the teams involved with a variety of daring bets. Regardless of how complicated a task might be a camper van parade, a garlic wreath, or a pide party in front of Istanbul s Blue Mosque the colleagues spared no effort to win their bets. In the end, Europe won 22:1, and Franz Reiner had no choice but to deliver on his promise to sing the European Song together with his colleagues from EMB. It was a memorable performance, which showed once again that nothing is impossible at DFS Europe. No matter whether a subsidiary s team consisted of six colleagues or 400, everyone at the 23 locations excitedly watched the live video linkups.

19 DFS UP CLOSE Financial INSIGHTS AUGUST The rhythm of DFS In Korea, DFS sometimes stands for Dancing Financial Services. This is thanks to the talents of Dae-Ryung Oh. What are the talents that help you to be a great contract manager? Diligence, thoroughness, integrity, dancing skills Wait dancing skills? Looking at the example of Dae-Ryung Oh, being able to move to the rhythm of music seems to be an excellent precondition for a harmonious work life. Dae always has a big smile for his teammates, says his colleague Kim Sung Min. I think this has to do with his dancing. He is a very cheerful person and he gets along with everyone. For me, dancing is the perfect stress release, says Dae. He trains about twice a week, either with friends or on his own. I just love dancing it makes me feel alive. His fa- vorite music is K-Pop, which is very popular in Asia and became a worldwide phenomenon with Psy s Gangnam Style. However, Dae prefers other bands like Big Bang colleagues not familiar with their music might want to check them out. Dae took up dancing 15 years ago when he entered college: First, it was just a hobby, he recalls. But I soon noticed that I had a real talent. I even thought about becoming a professional dancer. A knee injury put an end to these aspirations. Which is just as well for Mercedes-Benz Financial Services Korea. Dae joined the company in Being the open-minded person he is, it was important for him to work for a global corporation. And his dedication goes beyond work: For some years now, he has gathered new colleagues to rehearse a dance for the company s yearend party. It is a great way for them to get to know each other and the reason why Dae knows colleagues in all parts of MBFSK. People really like to see us dance. That makes me very proud, Dae says with one of those big smiles. Besides, it s just great fun for all of us. At in-house celebrations as well, Dae Oh likes to demonstrate his expertise as a dancer. Here he s performing at the tenth anniversary celebration of Daimler Korea at the end of 2013.

20 20 AUGUST 2014 Financial INSIGHTS NEWS FROM THE GROUP Make way! Designer von Mercedes-Benz haben das SUV als Coupé neu interpretiert. Volker Meyer, Projektleiter Showcar, baute dieses Concept Coupé SUV für die Weltpremiere in Beijing auf. A powerful presentation The presentation in Bremen was a world premiere in two respects. It was not only the public unveiling of Bremen s latest Mercedes model, the S205, but also the first such presentation to take place in a production plant. Compared to its predecessor, the new C-Class Estate represents a huge leap in terms of design, quality and innovative technologies. Thomas Weber Board of Management Member for Research, at the world premiere in Bremen. May 21 was thus a special day for Markus Völkel, the project lead for W/S205 at the Bremen plant, and many more people besides. Until now, our new vehicles celebrated their world premieres at international auto shows, such as those in Detroit and Geneva, or at separate events in famous cities like Hamburg and Berlin. At these events, the cars are presented to the trade press and the public for the first time. Following the successful production launch of the new C-Class sedan,

21 Financial INSIGHTS AUGUST What we like about the car Many employees were involved in the production launch of the S205 at the Bremen plant. Three of them told us about the things they particularly like about the new C-Class Estate. The new star from the Bremen plant: The C-Class Estate on the road. we were delighted to celebrate the station wagon s world premiere at the plant, said Völkel. Although the premiere took place near the car s production facility, the venue was nevertheless a special setting: the Bremen Customer Center, which is ideal for such occasions. More than 130 journalists came to the event to experience the new C-Class Estate. The visitors toured the production facility and took part in three workshops in the customer center s exclusive ambience, where they found out everything they needed to know about the new production technologies, assistance systems and services. Bremen plant director Andreas Kellermann reported that the premiere was a complete success. Everyone involved did their best, and that evening you only saw satisfied faces. Our guests found out what it means to experience modern luxury. Our star presented itself in the best possible light, he said. Technical data Michael Hoseit, Assembly (MOC/C3) There s lots of room wherever you look: in the front, in the middle and at the back. The S205 is obviously more spacious than its predecessors. The seating arrangement is more versatile as well. The interior can now be used for five, four, three or two seats. Klaus Meyer-Baessler, Logistics (LOG/AL) Mercedes connect me improves the interaction between man and machine. The new service package includes many of the features from the emergency call system. Other new features are the remote control for the auxiliary heating and a smartphone-based positioning system. Rouven Twisterling, Body Shop (KF/RC1) The S205 has become the new lightweight engineering leader, as it weighs 65 kilograms less than its predecessor. We re happy about that, and so are the customers. The increased use of materials such as aluminum and ultra-strong grades of steel leads to fuel savings of up to 20 percent. More room: Wheelbase extended by 80 mm to 2,840 mm, vehicle length by 96 mm to 4,702 mm, vehicle width by 40 mm to 1,810 mm, legroom by 45 mm, cargo capacity by 10 l to 1,510 l (according to ISO 3832). More output: 85 kw (115 hp) to 150 kw (204 hp). In combination with a hybrid module: kw ( hp). Gasoline engines and six-cylinder gasoline engine: kw ( hp). A four-cylinder engine with plug-in technology will be introduced later on: kw. C-Class Estate: Fuel consumption (combined): l/100 km. CO 2 emissions (combined): g/km

22 22 AUGUST 2014 Financial INSIGHTS THIS AND THAT PERSONALIA THE NUMBER Marcus Spickermann, Business Manager at moovel GmbH on level 3, has in his current position been appointed to level 2, effective June 1, He reports to Stephan Unger. In 2020 the amount of data that will be created, copied and consumed worldwide will increase to over BOOK REVIEW: WHY DIVERSITY MIGHT BE AN EVOLUTIONARY ADVANTAGE Individual differences and the diversity that results from them provide an evolutionary advantage. Groups that include the largest possible number of different variants and talents have better opportunities to adapt themselves to changing environmental conditions. In the business world, many people would say that this sounds like a purely normative statement. However, in his book Die Durchschnittsfalle (The Average Trap) the Austrian genetics professor Markus Hengstschläger offers numerous examples from biology to prove this point. For example, a species of butterfly called the peppered moth is protected by its white color when it perches on birchbark; it s hard for birds to see it, so they can t feed on it. Nonetheless, there has always been a small minority of black peppered moths. At first glance, this makes no sense from an evolutionary point of view. But in fact it makes very good sense. During the Industrial Revolution in Great Britain, soot from factory chimneys colored birchbark black, and during this era the number of black peppered moths exploded, whereas the number of white peppered moths declined. The exotic minority suddenly had a definite advantage in terms of its prospects for survival. Observations of this kind encourage Hengstschläger to make a strong plea for more courageous individuality. He believes that individuality is the most important foundation of our ability to master the challenges of the future. This internationally renowned geneticist also investigates the question of what factors our individual talents depend on and he answers the question Nature or nurture? with a clear Both! On the one hand, even personal characteristics such as optimism and aggressiveness are genetically determined to a certain extent in other words, we can t jump out of our own skin. On the other hand, no one is born a master either there s no unusual success without an unusual amount of effort. Hengstschläger s book expands the diversity debate by adding a valuable perspective. He concludes that genes are only the equivalent of pencil and paper. We use them to write our stories ourselves and every individual should summon up the courage, based on his or her individual talents and interests, to develop a very personal narrative style. Markus Hengstschläger: Die Durchschnittsfalle Gene, Talente, Chancen (currently available in German only), 188 pages, C. Bertelsmann, Salzburg 2012 ISBN ; One zettabyte corresponds to the content of 25 billion DVDs. If all of this data were burned on DVDs, the resulting stack would reach from the earth all the way to Mars. IMPRESSUM zettabytes Publisher: Daimler Financial Services AG, Corporate & Marketing Communications For the Publisher: Andreas Spannbauer, Manager Global Corporate Communications, Daimler Financial Services Editor: Bettina Buchholz Supporting this issue: Michael Braun, Karen Cabek, Lisa Leonhardt, Jackie Lin, Melinda Mernovage, Anna Messner, Holger Mohn ( From the Group ), PRH Hamburg Kommunikation GmbH, Maria Seyrig Graphic Design: stilgruppe Büro für visuelle Gestaltung, Kleinmachnow Photos: Daimler AG, Daimler Financial Services AG, Maxim Lysenko/ shutterstock.com, PRH Hamburg Kommunikation GmbH, shutterstock, thinkstock, private Lithography: highlevel GmbH, Berlin Printing: X-PRESS Grafik & Druck GmbH, Berlin If you want to give us feedback on the Financial INSIGHTS or if you have suggestions for an article in one of the upcoming issues please contact us: [email protected]. We look forward to your s! D I H I

23 12 QUESTIONS FOR Financial INSIGHTS AUGUST questions for Dieter Buhl Name: Dieter Buhl Age: 58 Place of residence: Stuttgart Family status: married Philosophy of life: Dream like you ll live forever, live like you ll die today When does your alarm clock ring, and what s the first thing you do in the morning? WHEN DOES YOUR ALARM CLOCK RING, AND It usually rings too early, and I need a quiet breakfast to start off my day. O YOU PREFER COFFEE OR Do you prefer coffee or tea? WHAT REALLY MAKES YOU L What really makes you laugh? WOULD YOU RATHER WATCH Would you rather watch an action film or a romantic comedy? WHAT WAS YOUR FAVORITE S What was your favorite subject in school? WHAT THREE THINGS WOULD What three things would you take along to a desert island? F A BOOK WERE WRITTEN A If a book were written about your life, what would it be called? WHAT DO MOST PEOPLE NOT What do most people not know about you? WHAT S YOUR FAVORITE LEIS What s your favorite leisure activity? Coffee, and lots of it. A spontaneous gag: something that s witty and satirical, offbeat, somewhat weird and with a touch of black humor. Neither one. If I want a laugh, I ll watch Monty Python s Life of Brian, and if I want inspiration I ll watch the film Lessons of a Dream. Recess. A solar-powered ipad, my pillow, and my treadmill (after all, I don t want to get out of shape). This won t be an easy way. I used to be the trainer of a women s handball team. There I learned some lessons I ll never forget. OW WOULD YOU DE AS IST DAS VERRÜC Driving my 1994 MG RV8 sports car sorry, it s not a Mercedes! How would you describe your driving style? It ranges from defensive to offensive. I like to see just what my car is capable of, without accumulating any penalty points in the Flensburg point system. Let s assume you unexpectedly have a lot of time on your hands. Is there a big project you ve always wanted to tackle? Spending two months in the seclusion of a cloister. S THERE ANY MESSAGE YOU Is there any message you would like to pass along to our employees for the rest of the year? It always seems impossible until it s done (Nelson Mandela)

24 1 2 3 So far, so good! 5 6 The workday can include a bit of fun, too! In 2014 the colleagues at DFS have once again celebrated a number of events and engaged in CSR projects all over the world. Here are some snapshots of their activities during the first half of the year Franz Reiner, Head of the Europe region, and the winners of the team award at the presentation of the European Excellence Award on May The colleagues from MBFS Australia show their guests a few local animal species at the DFS AAP Leadership Conference in March. 3 The month of July was dominated by the soccer World Cup. At the Service Center in Saarbrücken, colleagues watched the Germany-USA game. 4 The second Diversity Day was celebrated on June 3 all over the Daimler world, including MBFS in Turkey. 5 Peter Zieringer with the winners of the President s Award for the Americas in early April in San Diego. 6 The colleagues at MBFS Hong Kong did their best at the Walk up Jardine House, a sponsored walk on March A good atmosphere at the Global Leadership Dialogue in Berlin: Stephan Unger, Franz Reiner, and Klaus Entenmann. 8 Countless CSR activities have already been carried out this year at DFS. The most recent example was the Day of Caring at the Service Center in Berlin on July 8, when the colleagues built a new playground. 9 Which one is real? Klaus Entenmann at the Global Leadership Dialogue in Berlin in early June. 10 At another event, the President s Award for the AAP region was presented to a winning team from Singapore.