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SEC Company Response from DAIMLERCHRYSLER AG (MBGAF, MBGYY) (CIK 0001067318) (MBGAF) — Aug 15, 2005

DAIMLERCHRYSLER AG (MBGAF, MBGYY) (CIK 0001067318)
Date: Aug. 15, 2005 · CIK: 0001067318 · Accession: 0001104659-05-039651

AI Filing Summary & Sentiment

Referenced dates: June 30, 2005, June 30, 2005

Date
August 15, 2005
Author
DaimlerChrysler AG
Form
CORRESP
Company
DAIMLERCHRYSLER AG (MBGAF, MBGYY) (CIK 0001067318)

Letter

Division of Corporation Finance Re: DaimlerChrysler AG Form 20-F for the fiscal year-ended December 31, 2004 File No. 1-12356

Dear Ms. Blye:

Attached is DaimlerChrysler AG’s response to the comments of the staff of the U.S. Securities and Exchange Commission (the “Staff”) set forth in your letter dated June 30, 2005 (the “Comment Letter”).

As requested by the Staff, DaimlerChrysler also acknowledges that:

• the company is responsible for the adequacy of the disclosure in the filings;

• Staff comments or changes to disclosure in response to Staff comments do not foreclose the Commission from taking any action with respect to the filings; and

• the company may not assert Staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.

Please do not hesitate to contact the undersigned at +49-711-17-92786 if you have any questions regarding the response.

Sincerely,
DaimlerChrysler AG

Show Raw Text
CORRESP
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DaimlerChrysler
AG

August 15, 2005

VIA ELECTRONIC TRANSMISSION

Ms. Cecilia D. Blye

Chief, Office of Global Risk Security

Division of Corporation Finance

U.S. Securities and Exchange Commission

Washington, DC  20549-5546

  Re:

  DaimlerChrysler AG

  Form 20-F for the fiscal year-ended
  December 31, 2004

  File No. 1-12356

Dear Ms. Blye:

Attached is DaimlerChrysler AG’s response to
the comments of the staff of the U.S. Securities and Exchange Commission (the “Staff”)
set forth in your letter dated June 30, 2005 (the “Comment Letter”).

As requested by the Staff, DaimlerChrysler
also acknowledges that:

•                  the
company is responsible for the adequacy of the disclosure in the filings;

•                  Staff
comments or changes to disclosure in response to Staff comments do not
foreclose the Commission from taking any action with respect to the filings;
and

•                  the
company may not assert Staff comments as a defense in any proceeding initiated
by the Commission or any person under the federal securities laws of the United
States.

Please do not hesitate to contact the
undersigned at +49-711-17-92786 if you have any questions regarding the
response.

Sincerely,

DaimlerChrysler AG

  /s/ ppa. Dr. Peter
  Waskönig

  /s/ ppa. Robert
  Köthner

  Dr. Peter
  Waskönig

  Robert Köthner

  Vice President

  Vice President

  General Counsel DaimlerChrysler Europe,
  Africa, Asia

  Chief Accounting Officer

M E M O R A N D U M

August 15, 2005

  TO:

  Cecilia D. Blye

   Securities and Exchange Commission

  FROM:

  DaimlerChrysler AG

  Re:

  DaimlerChrysler AG

  Form 20-F for the fiscal year-ended December 31,
  2004

  File No. 1-12356

We are responding to the comment letter of
the Staff of the U.S. Securities and Exchange Commission (the “Staff”), dated June 30,
2005 (the “Comment Letter”), regarding our operations in Cuba, the existence
and status of a certain investigation by German authorities, and our contacts
with Iran.

Cuba

Comment:              Your
424(b)(3) prospectus supplement filed on March 4, 2005, states that
you and certain of your subsidiaries and affiliates “occasionally sell,
directly or through their authorized sales representatives, passenger cars,
commercial vehicles, vehicle components and other products to persons located
in Cuba.” In view of the fact that Cuba has been identified by the U.S. State Department
as a state sponsor of terrorism, and is subject to economic sanctions
administered by the U.S. Treasury Department’s Office of Foreign Assets
Control, please describe for us your operations in Cuba; advise us of the
materiality to the company of its operations in Cuba; and give us your view as
to whether those operations constitute a material investment risk for your
security holders. In preparing your response, please consider that evaluations
of materiality should not be based solely on quantitative factors, but should
include consideration of all factors, including the potential impact of
corporate activities upon a company’s reputation and share value, that a
reasonable investor would deem important in making an investment decision.

Response:  DaimlerChrysler does not maintain any
operations in Cuba, either directly or through any of its subsidiaries or
affiliates. It also does not hold, directly or indirectly, an interest in any
Cuban entity. As discussed further below, DaimlerChrysler does not consider its
activities in Cuba to be material.

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DaimlerChrysler exports Mercedes-Benz
vehicles (passenger cars, busses, trucks and vans), vehicle kits requiring
assembly, and automotive parts to a non-affiliate Cuban company under a
wholesale distribution agreement that restricts resales to transactions within
Cuba. The products distributed through the Cuban distributor are manufactured
in, and shipped from, Europe or South America.

The general distributor company is a joint
venture between an Egyptian national who holds 51% of its equity interests, and
a state-owned Cuban company, which holds the remaining 49%, and the current
general manager of the distributor is an expatriate employee of DaimlerChrysler
AG. As is the case with many of DaimlerChrysler’s general distributors in other
countries, the Cuban distributor is also an authorized dealer for the retail
sale of these products within Cuba, and a Cuban affiliate of the general
distributor is authorized to provide warranty service in Cuba with respect to
the products.

In March 2005 DaimlerChrysler’s
Brazilian subsidiary entered into a contract to supply diesel engines to an
independent Brazilian supplier for generator sets destined for Cuba. The contract
term is 4 years and the contract value (aggregate purchase price) is $20
million. In addition, one of our German subsidiaries entered into two
contracts, one in February 2005 and the other in March 2005, to
supply a total of 965 generator units to the Cuban state through an independent
importer. Under the first contract, which has a contract value of approximately
Euro 100 million, 333 units are scheduled to be delivered in 2005; under the
second contract, which has a contract value of approximately Euro 200 million,
632 units are to be delivered in 2006. DaimlerChrysler does not consider any of
these transactions to be material to the DaimlerChrysler group.

DaimlerChrysler’s vehicle sales into Cuba are
also not material to the company’s consolidated financial results. In 2004,
DaimlerChrysler sold 5 Mercedes-Benz passenger cars and approximately 660
Mercedes-Benz light commercial vehicles, which includes the sale of  420 ambulances, to its Cuban general
distributor (2003:  29 and approximately
240, respectively). These vehicle sales resulted in total revenues of
approximately Euro 12 million in 2004 and approximately Euro 9 million in 2003.
As reported in our 2004 annual report on Form 20-F, DaimlerChrysler’s
worldwide unit sales of Mercedes-Benz passenger cars were 1,226,800 in 2004 and
1,216,900 in 2003. Worldwide unit sales of commercial vehicles amounted to
712,200 in 2004 and 501,000 in 2003. DaimlerChrysler’s total revenues were Euro
142 billion in 2004 and Euro 136 billion in 2003. As of year-end 2004 and 2003,
our total exposure related to a potential loss of accounts receivable for goods
supplied to Cuba was less than Euro 5 million and less than Euro 2 million,
respectively. We expect vehicle sales in 2005 to be in a range comparable to
that in 2004 and 2003.

We do not consider any of these activities to
pose a material investment risk to our security holders.  Cuban sales are clearly not quantitatively
material to DaimlerChrysler’s consolidated financial condition.  Moreover, we believe our Cuban

3

sales comport with applicable export laws of Europe and the United
States* and, as a result, we do not anticipate any material adverse impact on
DaimlerChrysler’s reputation or share value.
In this regard, we note that according to our share register, more than
80% of our publicly traded ordinary shares are held by non-U.S. holders.  Further, apart from an inquiry relating to
the settlement referenced below, we have no record of any of our U.S. shareholders
ever inquiring of DaimlerChrysler whether or to what extent it has operations
or sales in Cuba. We also note with respect to our publicly traded debt
securities, that the company has included a reference to Cuban sales in each of
the Form F-3 registration statements it has filed since its formation in
1998 through the March 4, 2005 prospectus supplement noted by the Staff,
with no discernible negative impact on the market for our debt securities as a
result of such disclosure. For these reasons it is our view that our sales
relative to Cuba do not constitute a material investment risk for our security
holders.

Iran

Comment:              We
are aware of a published report that you are under investigation by German
authorities because of some 453 units of truck-trailers you sold to Saudi
Arabia that surfaced in Iran. Please confirm for us the existence of the
referenced investigation, advise us of its status, and describe for us all
direct and indirect contacts the company has with Iran, a country that has been
identified as a state sponsor of terrorism, and is subject to U.S. economic
sanctions. We may have further comment.

Response:  DaimlerChrysler can confirm that German
authorities are investigating the assumed delivery to Iran in 2003 of 270
Mercedes-Benz trucks originally destined for Saudi Arabia. These trucks were
part of an order for 453 Mercedes-Benz commercial vehicles by DaimlerChrysler
AG’s general distributor of Mercedes-Benz vehicles in Saudi Arabia
(DaimlerChrysler AG holds a 26% minority interest in the distributor). After
learning that the first 183 vehicles delivered pursuant to the order had been
received by an Iranian organization on the German government’s “restricted”
list, DaimlerChrysler AG ceased delivery of the remaining 270 vehicles and informed
the German authorities accordingly. Sales to endusers on the “restricted” list
must be approved by German authorities irrespective of whether the products are
intended for military or civilian purposes. DaimlerChrysler AG was then advised
by its Saudi Arabian distributor that a new customer in Saudi Arabia for the
remaining 270 trucks had been located and was provided explicit assurances that
the vehicles were destined for and would remain in Saudi Arabia.
DaimlerChrysler AG notified the German authorities about the delivery after it came

* In 2004 we
settled a matter that we had voluntarily reported to the U.S. Treasury
Department’s Office of Foreign Assets Control regarding the sale by a Mexican
subsidiary of a limited number of buses in 1995 and 1996 (with spare part sales
through 1999). The matter settled for a nominal amount ($32,500) without any
finding of a violation of law or the assessment of any penalty.

4

to believe that these vehicles had also been sold to the same Iranian
organization that had received the first 183 units, not withstanding the
assurances it had received. DaimlerChrysler also advised the authorities that
it believes that an employee of the Saudi Arabian distributor engaged in
fraudulent conduct, including the use of forged documents, to disguise the
ultimate destination of these vehicles. The Saudi Arabian distributor has since
terminated the employee. The prosecutor’s office in Stuttgart is involved in
the investigation, which has included a search of DaimlerChrysler AG’s
Stuttgart headquarters in November 2004, and the commencement of witness
hearings in March 2005. The investigation is ongoing.

DaimlerChrysler’s direct and indirect
contacts with Iran can be summarized as follows:

•                  DaimlerChrysler
AG maintains a representative office in Tehran which coordinates all
DaimlerChrysler-related business activities in Iran.

•                  DaimlerChrysler
AG also maintains relations with three general distributors in Iran, one for
Mercedes-Benz passenger cars, one for Mercedes-Benz commercial vehicles, and
one for off-highway engines.  The general
distributor for passenger cars is a wholly-owned subsidiary of DaimlerChrysler
AG, the other two distributors are independent companies. The general
distributor for commercial vehicles is partially owned by the Iranian state. A
wholly-owned subsidiary of that distributor purchases spare parts from
DaimlerChrysler AG.

•                  DaimlerChrysler
AG holds a 30% ownership interest in an Iranian diesel engine manufacturer. The
remaining shares in this manufacturer are held by DaimlerChrysler AG’s general
distributor for commercial vehicles and one of the distributor’s affiliates.
DaimlerChrysler AG supplies trailer axles and DaimlerChrysler AG’s Brazilian
and Indonesian subsidiaries supply bus chassis to several Iranian customers.

•                  In
2002 and 2003, DaimlerChrysler AG sold and delivered approximately 4,000
passenger cars, including associated tools, equipment and technical assistance
services, to NAJA, the purchasing office of the Iranian Police Force. The
technical assistance services are being provided by DaimlerChrysler AG’s
general distributor for Mercedes-Benz passenger cars.

•                  DaimlerChrysler
AG has retained a Swiss consulting firm owned by two Iranian individuals to
provide general advice on conducting business in Iran. It also has a
consultancy arrangement with an Iranian firm relating to the delivery of bus
chassis to an Iranian entity.

•                  In
certain cases, DaimlerChrysler AG provides logistical, financial (for example,
sponsorships) and other support for Iranian humanitarian efforts (for example,
earthquake relief) as well as social and cultural events.

5

DaimlerChrysler’s sales into Iran have been
immaterial to the company’s consolidated financial results. DaimlerChrysler’s
revenues from sales in Iran were approximately Euro 300 million in 2004 and
approximately Euro 200 million in 2003 compared to total group revenues of Euro
142 billion in 2004 and Euro 136 billion in 2003. In 2004, DaimlerChrysler AG,
directly or through one or more non-U.S. affiliates, sold 14 Mercedes-Benz
passenger cars and approximately 5,800 Mercedes-Benz commercial vehicles in
Iran (2003: approximately 1,500 and 2,400, respectively). Worldwide unit sales
of Mercedes-Benz passenger cars were 1,226,800 in 2004 and 1,216,900 in 2003,
and worldwide unit sales of commercial vehicles amounted to 712,200 in 2004 and
501,000 in 2003. We expect 2005 sales in Iran to be in a range comparable to
that in 2004 and 2003.

All products sold to Iranian distributors or
customers are produced in Germany or Brazil and sold by DaimlerChrysler AG or
one of its German or Brazilian affiliates. We believe our Iranian sales comport
with applicable export laws of Europe and the United States, subject to any
findings to the contrary that may be reached in the German investigation
described above. As a result, we do not anticipate any material adverse impact
from these sales on DaimlerChrysler’s reputation or share value.

6