Daimler chairman and Mercedes-Benz Cars chief Dieter Zetsche on Wednesday told the annual general meeting in Berlin that, after six months minus Chrysler: "All of our business operations are developing well - our key figures are significantly better than they have been in recent years.

"We have a clear strategy for sustainable profitable growth," he added.

In 2007, Daimler invested EUR4.1bn (US$6bn) in research and development and EUR1.8bn (US$2.6bn) in environmental protection and will spend almost EUR14bn (US$20bn) in research and development in the period up to 2010.

Zetsche noted no single technology has emerged as being clearly superior to all the others: "There is no clear route to the mobility of tomorrow."

Daimler's "road map for sustainable mobility" consists of: the ongoing optimisation of vehicles with innovative combustion engines; the additional improvement of efficiency through hybridisation; and zero-emission driving with fuel cells and battery-driven systems.

The company is also actively involved in the search for future energy sources, namely clean fuels for combustion engines as well as new energy sources for zero-emission driving, if possible from regenerative production.

Zetsche said Daimler would not start building only small cars: "Our route to sustainable mobility is based on technological innovations, not renunciation."

The aims to offer at least one model in each Mercedes-Benz core model series that is a leader in terms of consumption and emissions. In addition to zero-emission driving, Daimler is also pursuing the goal of accident-free driving.

On the economy, Zetsche said: "Currently, the economic climate suggests that things will get tougher rather than easier." Key factors are the credit crisis in the United States, the ongoing weakening of the dollar against the euro, the development of the raw material markets, and the low level of confidence in the US economy with possible effects around the world.

Demand for passenger vehicles in the United States is likely to be much lower this year than in 2007; in western Europe, it is expected to remain flat.

Industry growth will therefore continue to be driven by emerging markets, whose growth is so dynamic that it will more than offset the triad's weakness.

Overall, Daimler is assuming that the global passenger car market will grow about 2% in 2008.

While Europe is expected to maintain last year's high commercial vehicle sales level, Daimler does not anticipate a North America recovery before the second half.

Zetsche said: "Daimler has secured approximately 80% of its business volume against exchange-rate risks for 2008. And we have already hedged more than 40% of that risk for 2009. In addition, we aren't involved in the subprime lending business. Thanks to our high level of gross liquidity, we currently don't need to raise capital on the market."

The economic slowdown is expected primarily to affect the volume segment for passenger vehicles. The premium segment - Mercedes-Benz territory - is generally more stable, especially in the United States.

"So we're well equipped to successfully handle the current macroeconomic challenges," Zetsche said.

Mercedes-Benz Cars aims to achieve an average return on sales of 10% beginning in 2010. For Daimler Trucks, the company aims to post an average return on sales of 8% beginning in 2010 over the cycle.

Daimler Financial Services' global contract volume is expected to continue expanding. In that business, the Group aims to achieve a return on equity of at least 14% in 2008 and beyond.

At group level, Daimler expects unit sales to increase further in 2008, while EBIT from the operating business is expected to be significantly higher than in 2007.

Zetsche added: "Our long-term credit rating has also developed positively. And that's yet another indicator of our improved risk profile, our increased profitability, and our solid financial structure."