DaimlerChrysler Bank Posts Further Growth

Stuttgart, February 26, 2007 – DaimlerChrysler Bank AG, Stuttgart, a subsidiary of DaimlerChrysler Financial Services AG, Berlin, is confident that its business success last year will continue in 2007. “We grew very profitably in a difficult market in 2006, posting record results for contract volume and new business,” said Peter Zieringer, CEO of DaimlerChrysler Bank, at a press conference held in Stuttgart on Monday, February 26, 2007. “We expect business development to be successful this year as well.”

In 2006, DaimlerChrysler Bank increased its contract volume for leasing and financing by five percent to €16 billion and 774,000 contracts. As a result, the Bank has more than tripled its portfolio over the past decade. New business increased by €380 million to the new record figure of €8.4 billion. DaimlerChrysler Bank finances half of all newly registered vehicles from the DaimlerChrysler Group in Germany and now serves more than one million customers in both its vehicle business and its direct banking business.

Growth was hampered somewhat last year by the increase in interest rates. The repeated raising of the prime rate by the European Central Bank cut DaimlerChrysler Bank’s margins for its leasing and financing business. However, customers’ reliability in making payments had a very positive effect on business. The default rate was at an all-time low, due in part to the good economic development and the drop in bankruptcies, particularly among commercial customers. The low number of loan defaults as well as more efficient internal processes and cost structures were more than able to offset the pressure on margins, thus ensuring profitable growth for DaimlerChrysler Bank in 2006.

DaimlerChrysler Bank is celebrating its 20th anniversary this year. Consumer behavior has changed significantly since the Bank was established. “Customers lease and finance vehicles today as a matter of course and around three-fourths of the car buyers in Germany now use such services” says Zieringer. DaimlerChrysler Bank has also benefited from this development, and its financial services have helped bring more than three million DaimlerChrysler vehicles onto the road.

The trend among private customers is toward financing solutions that incorporate additional insurance offerings and servicing in the monthly rate and eliminate the risks associated with the disposal of used vehicles once the contract has expired. As a result, DaimlerChrysler Bank was able to further boost sales of its leasing-like Plus 3 financing package last year. At the expiration of the contract, this product allows customers to chose to return the vehicle, to continue financing it or to keep it in exchange for a final payment. More than 40 percent of the Bank’s private customers now use this variant to finance their vehicles.

Many car buyers wish to know exactly how much a particular vehicle will cost them per month, because people who know this rate are better able to plan their financial commitments. According to a survey conducted by the Working Group of Automotive Banks, 40 percent of car buyers look for a comprehensive mobility package. Such packages also benefit retailers as the increased customer contact helps boost buyers’ loyalty to the brand and to their dealerships.

DaimlerChrysler Bank also posted significant growth in the commercial customer segment, where its portfolio of trucks, vans and buses amounted to about €5.7 billion at the end of 2006, representing an increase of six percent. DaimlerChrysler Bank therefore remains the market leader when it comes to financial services for commercial vehicles. At the end of 2006, Mercedes-Benz CharterWay, the service provider for the management of commercial vehicle fleets, managed a total of 28,000 vehicles, representing a portfolio volume of €878 million (+ 3 percent). One of the leading German providers of fleet management services in the passenger vehicle segment is DaimlerChrysler Fleet Management, which managed 161,000 vehicles at the end of last year, representing a portfolio volume of €856 million (+ 4 percent). In January 2007, the company launched FleetPlus, a product package for small and medium-size passenger car fleets with 10 to 30 vehicles. FleetPlus is tailored to the mobility needs of smaller fleets, encompassing a leasing contract with maintenance and repair services for normal wear as well as tire replacement and servicing. This segment is expected to generate the largest growth in the fleet management market.

The pre-owned vehicle business was another one of the Bank’s main strategic areas in 2006. Whereas Kraftfahrt-Bundesamt, the German Federal Motor Transport Authority, reports that the pre-owned vehicle market grew by only 1.2 percent in 2006, DaimlerChrysler Bank increased its number of new financing contracts by five percent compared to the previous year and managed a total of 85,000 contracts.

DaimlerChrysler Bank served more than one million customers at the end of 2006. The acquisition of the full banking license and the launch of the direct banking business in mid-2002 have enabled DaimlerChrysler Bank to double the number of its customers in the past five years. DaimlerChrysler Bank offers focused investment products for its customers and does not aim to replace their principle banks.

In 2006, the Bank managed the deposits of around 230,000 customers (+ 3 percent), with a total volume of €3.1 billion. DaimlerChrysler Bank also expanded its range of portfolio management products, in which customers have invested €200 million (+ 25 percent). The Bank’s business with certificates was particularly successful. In February 2007, the Bank expanded its offerings further by introducing the DJE Real Estate fund.

In the credit card business, the Bank recorded an increased demand for both the MercedesCard and the DaimlerChrysler Card. At the end of 2006, around 335,000 of these cards were in use, representing an increase of 15,000 cards on the previous year.

In the current business year, DaimlerChrysler Bank aims to gain additional customers particularly through its deposit banking business. Since customers currently prefer short-term deposits with guaranteed fixed interest rates, the Bank introduced a six-month fixed-interest account in February that offers 3.6 percent interest. As a result, the Bank now provides an attractive range of accounts, extending from money market accounts with 3.3 percent interest to 12-month fixed-interest deposits with 4 percent interest.

The European markets are becoming more closely aligned because of the single euro currency and the European Central Bank’s uniform interest-rate structure. At DaimlerChrysler Financial Services, the 21 European subsidiaries will also work together much more closely in the coming years. As the company’s largest national subsidiary, DaimlerChrysler Bank plays a pioneering role in many projects for the implementation of the Europe strategy.

The strategic focus here is on the expanded exchange of products and services. DaimlerChrysler Bank will help the company better exploit the market opportunities throughout Europe while also benefiting from the know-how of other national subsidiaries. In the future, background processes, such as credit checks and loan-decision procedures, will be more highly standardized throughout Europe.

In Luxembourg, DaimlerChrysler Financial Services successfully launched a European platform for asset-backed securities (ABS), which enables the European subsidiaries to collateralize automotive loans and then place them on the capital market. In addition to making the subsidiaries more flexible, the new platform creates cost benefits from refinancing. As a pioneer in this field, DaimlerChrysler Bank has already used this platform on two occasions: In November 2005 it placed loans totaling €700 million, followed by an even larger placement of €1.5 billion in November 2006.