Report of the Audit Committee

The Audit Committee convened six times in 2008. These meetings were generally attended by, in addition to the members of the Audit Committee, the Chairman of the Supervisory Board, the Chairman of the Board of Management, the member of the Board of Management responsible for finance and controlling (CFO), the external auditors and, for the appropriate items of the agenda, the heads of the relevant specialist departments. In parallel, the Chairman of the Audit Committee also held regular individual discussions, for example with the external auditors, the CFO, the heads of the Corporate Accounting, Corporate Audit, Corporate Compliance and Legal departments and the Group’s independent Compliance Advisor. The Audit Committee was regularly informed about the results of these discussions. The Chairman of the Audit Committee reported to the Supervisory Board about the results of each meeting in the following Supervisory Board meeting.

In two meetings attended by the external auditors in February 2008, the Audit Committee reviewed the annual company financial statements and the annual consolidated financial statements as well as the management reports of Daimler AG and the Group for the year 2007, the annual report according to Form 20-F, the proposal made by the Board of Management on the appropriation of profits and the report of the Board of Management (which was intended for subsequent publication). The Audit Committee recommended that at its next meeting the Supervisory Board should approve the annual financial statements and adopt the Board of Management’s proposal on the appropriation of profits.

In further meetings during the course of the year, each attended by the external auditors, the Audit Committee together with the Board of Management dealt in detail with the Group’s interim reports on the first quarter, first half and first nine months of 2007. The Audit Committee regularly examined the qualifications and independence of the external auditors and, in a separate procedure, their efficiency. It also monitored the implementation of the principles decided upon for the approval of services provided by the external auditors. After receiving the approval of the Annual Meeting, the Audit Committee engaged KPMG AG Wirtschaftsprüfungsgesellschaft (formerly KPMG Deutsche Treuhand-Gesellschaft Aktiengesellschaft, Wirtschaftsprüfungsgesellschaft), Berlin, to conduct the 2008 annual audit, negotiated the audit fee of the external auditors, and determined the important audit issues for the year 2008.

A key point of the Audit Committee’s work in 2008 was dealing with the Group’s internal control mechanism in accordance with Section 404 of the Sarbanes-Oxley Act (internal control over financial reporting). The Audit Committee also dealt with the effectiveness and further development of the risk management system, the report on legal risks, the reports and programs of the Corporate Audit and Corporate Compliance departments, new legislative developments of relevance for the Audit Committee and significant differences between accounting according to the German Commercial Code (HGB) and according to IFRS.

As in previous years, the investigations taking place at the Group that were initiated by the United States Securities and Exchange Commission (SEC) formed another focus of the Audit Committee’s work also in 2008. In each regular meeting, the Audit Committee was informed about the stage of affairs by the Group’s management and the lawyers and external auditors involved and by the Group’s independent Compliance Advisor. In this context, the progress made with the implementation and further development of internal guidelines and codes of conduct as far as a comprehensive compliance system was discussed. The Chairman of the Audit Committee was also continually informed between the regular meetings about important targets and activities of the compliance organization.

Furthermore, the Audit Committee dealt regularly with complaints and criticism concerning financial reporting, the Group’s reputation and the internal monitoring system, which were received from Daimler employees confidentially and, if desired, anonymously. Information concerning violations of Section 302, Subsection 5 of the Sarbanes-Oxley Acts was received separately.

In two meetings attended by the external auditors in February 2009, the Audit Committee reviewed the annual company financial statements and the annual consolidated financial statements for 2008 with the respective management reports, including the annual report on Form 20-F, and the proposal made by the Board of Management on the appropriation of profits. The audit reports and important accounting matters were discussed in detail with the external auditors. Following an intensive review and discussion of the documents, the Audit Committee then recommended that the Supervisory Board agree to the Board of Management’s proposal on the appropriation of distributable profits and approve the financial statements.

Once again in the year 2008, the Audit Committee conducted a specific self-evaluation of its activities..

Stuttgart, February 2009

The Audit Committee

Bernhard Walter
Chairman