Mercedes-Benz Finance North
America LLC
Annual Report 2024
1
Table of Contents
Responsibility Statement..............................................................................................................................3
Management Report.....................................................................................................................................4
Report of Independent Auditors....................................................................................................................8
Statement of Comprehensive Income.........................................................................................................11
Statement of Financial Position..................................................................................................................12
Statement of Changes in Equity .................................................................................................................13
Statement of Cash Flows............................................................................................................................14
Notes to the Financial Statements .............................................................................................................15
1.
General information......................................................................................................................15
2.
Basis of preparation .....................................................................................................................15
3.
Material accounting policies.........................................................................................................17
4.
Other financial income/(expense), net .........................................................................................19
5.
Transactions with related parties..................................................................................................19
6.
Statement of cash flows...............................................................................................................21
7.
Financial instruments ...................................................................................................................22
8.
Management of financial risks......................................................................................................25
9.
Related party relationships...........................................................................................................28
10. Capital management ....................................................................................................................28
2
Responsibility Statement
To the best of our knowledge, and in accordance with the applicable reporting principles, the financial
statements of Mercedes-Benz Finance North America LLC (the Company) provide a true and fair view of
the assets, liabilities, financial position and profit or loss of the Company, and the Company’s Management
Report provides a fair review of the development and performance of the business and the position of the
Company, together with a description of the principal opportunities and risks associated with the expected
development of the Company.
Farmington Hills, MI (USA), April 28, 2025
Ramasami Muthaiyah
Christoph Rieker
Chief Executive Officer
Chief Financial Officer
3
Mercedes-Benz Finance North America LLC – Annual Report 2024
(all amounts in thousands of U.S. dollars)
Management Report
General
Mercedes-Benz Finance North America LLC (“MBFNA” or the “Company”) is a wholly-owned subsidiary of
Mercedes-Benz North America Corporation (“MBNAC”), which is a wholly-owned subsidiary of Mercedes-
Benz Capital Investments B.V. (“MBCI”), which is a wholly-owned subsidiary of Mercedes-Benz AG
(“MBAG”), which is in turn a wholly-owned subsidiary of Mercedes-Benz Group AG (“MBGAG”).
MBFNA accesses U.S. and foreign capital markets to raise funds, which it lends to MBNAC through a
consolidated funding and cash management system. As such, it has relationships with other subsidiaries of
MBGAG. MBGAG issued full and unconditional guarantees for MBFNA’s obligations incurred under its
outstanding notes and bonds program and commercial paper program. MBFNA and MBNAC entered into
an intercompany loan agreement which is intended to mirror MBFNA’s external borrowings such that
interest expense with third parties is offset by corresponding interest income from MBNAC.
The nature of the Mercedes-Benz Group operations in the US includes the distribution of passenger cars
purchased from Mercedes-Benz AG under the brand name Mercedes-Benz. Mercedes-Benz Group also has
financial services operations that principally provide automotive financing to its dealers and their
customers, including retail and lease financing for cars, dealer inventory and other financing needs.
This document contains forward-looking statements that reflect our current views about future events. The
words “anticipate,” “assume,” “believe,” “estimate,” “expect,” “intend,” “may,” “can,” “could,” “plan,”
“project,” “should” and similar expressions are used to identify forward-looking statements. These
statements are subject to many risks and uncertainties, including:
•
an adverse development of global economic conditions, in particular a decline of demand and
investment activity in the United States;
•
a deterioration of our funding possibilities on the credit and financial markets, which could result in
an increase in borrowing costs or limit our funding flexibility;
•
changes in currency exchange rates and interest rates;
•
changes in laws, regulations and government policies that may affect the Company or any of its
sister companies; and
•
the business outlook of the Company’s sister companies in the United States, which may affect the
funding requirements of these companies in the automotive and financial services businesses.
The following discussion should be read in conjunction with the MBFNA’s financial statements as of and for
the years ended December 31, 2024 and 2023, which were prepared using IFRS Accounting Standards as
issued by the International Accounting Standards Board (“IASB”). Note 3 to the financial statements
provides an overview of the Company’s material accounting policies.
The percentages in the following discussion were computed using exact dollar amounts and numbers.
Some of those percentages may, therefore, not reflect the ratio between the rounded amounts presented
below.
4
Mercedes-Benz Finance North America LLC – Annual Report 2024
(all amounts in thousands of U.S. dollars)
Earnings
Interest Income
Interest income increased to $1,241,991 in 2024 from $885,585 in 2023, an increase of $356,406 or 40%.
The increase was caused by higher interest rates and higher average balance of receivables from related
parties.
Interest Expense
Interest expense increased to $1,241,991 in 2024 from $885,585 in 2023, an increase of $356,406 or
40%. The increase is due to higher interest rates for issuances in and higher average balance of notes and
bonds and commercial paper in 2024.
Guarantee Fees
Guarantee fees charged by MBGAG (11 bp on outstanding external debt) were $28,732 in 2024, compared
to $21,811 in 2023. This was caused by the Company’s outstanding balances of external borrowings which
were higher in 2024 compared to 2023.
Other Financial Income/(Expense), Net
Other financial income/(expense) was $11 and $(14) for 2024 and 2023. The change is due to foreign
exchange on EUR invoices paid.
Administrative Expenses
Administrative expenses were $2,880 and $3,027 for 2024 and 2023, respectively. This was due to lower
legal fees in 2024.
Reimbursement of Expenses from MBNAC
MBFNA and MBNAC are parties to an agreement where MBNAC reimburses MBFNA for any and all
expenses incurred in connection with the administration of MBFNA’s notes and bonds program and
commercial paper program. The reimbursement of net expenses from MBNAC amounted to $31,601 in
2024 and $24,852 in 2023.
Profit and Loss
Profit and loss was $0 in both 2024 and 2023.
Financial Position
Total assets were $26,257,314 at December 31, 2024 compared to $23,177,686 at December 31, 2023,
an increase of $3,079,628 or 13%. The increase is primarily due to issuances of loans to related parties
exceeding the repayments of loans to related parties.
Total liabilities were $26,257,314 at December 31, 2024 compared to $23,177,686 at December 31,
2023, an increase of $3,079,628 or 13%. The increase reflects the issuances of notes and bonds and
commercial paper exceeding repayments in 2023.
Liquidity and Capital Resources
In the ordinary course of business, the Company issues notes and bonds and commercial paper in the US
and foreign capital markets and lends the proceeds to MBNAC. In 2024, $9,810,313 new notes and bonds
and commercial paper were issued, while there were $7,875,124 new issuances in 2023. The Company
had neither cash nor cash equivalents as of December 31, 2024 and 2023.
5
Mercedes-Benz Finance North America LLC – Annual Report 2024
(all amounts in thousands of U.S. dollars)
Risk Report
Many factors could directly and indirectly, through the close affiliation with MBGAG’s affiliated companies,
affect the Company’s business, financial condition, and cash flows. The results of operations would not be
affected due to the existing reimbursement agreements with MBNAC. The principal risks are described
below.
Economic Risk
The Federal Reserve began the current rate-cut cycle in September of 2024 and has indicated the
possibility of additional rate cuts in 2025. Any further rate cuts will depend on inflation continuing to
advance towards the 2% target and on the job market weakening.
In 2025 the auto sector will continue to face the challenge of transitioning to battery electric vehicles, as
suppliers and automakers invest in electrification while also continuing to fund internal combustion
engines and hybrid technology to satisfy market requirements. The auto sector also faces potential
volatility amid regulatory changes under the new presidential administration. Proposed tariffs on imports
and a potential trade war could negatively impact the auto industry as the passing of these added costs to
the consumer could lower new vehicle sales. Additionally, an environment with high interest rates, low
vehicle affordability, and rising dealer inventories could adversely affect new vehicle sales in 2025.
Industry Risks
Possible declines in vehicle sales may be caused in particular by a worse-than-expected macroeconomic
environment for the Mercedes-Benz Group and in the context of political, trade policy or economic
uncertainties. In addition to weaker economic growth overall, factors such as high energy prices, high
inflation, interest rates, and volatile exchange rates may lead to market uncertainty or loss of purchasing
power and may have a negative impact on demand in the automotive sector. A lower-than-expected market
acceptance of electric vehicles can also lead to risks in the development of unit sales and can have a
negative impact on earnings.
In addition, the financial services that the Mercedes-Benz Group offers in connection with the sale of
vehicles involve several risks. These include borrowers’ worsening creditworthiness, so receivables might
not be recoverable. Additionally, it includes the potential inability to recover the investments in leased
vehicles or to collect the sales financing receivables if the resale prices of the vehicles securing these
receivables fall short of their book value (residual value risk). This may lead to additional funding
requirements through MBFNA.
Financial Risks
Changes in interest rates may have substantial adverse effects on the Company’s cash flows. Adverse
effects may also arise from downgrades of the long-term debt ratings of the Company’s ultimate parent
company, MBGAG, and the ability of the Company to issue debt in the US and European markets. Lower
demand for the Company’s debt instruments could increase the borrowing costs or otherwise limit
MBFNA’s ability to fund the Mercedes-Benz Group operations in the US.
Note 8 to the Company’s financial statements describes the risk management strategies employed by the
Company to address such risks.
If any of these risks and uncertainties materialize, or if the assumptions underlying any of our forward-
looking statements prove incorrect, then our actual results may be materially different from those we
express or imply by such statements. We do not intend or assume any obligation to update these forward-
looking statements. Any forward-looking statement speaks only as of the date on which it is made.
6
Mercedes-Benz Finance North America LLC – Annual Report 2024
(all amounts in thousands of U.S. dollars)
Corporate Governance
Corporate Bodies
As of December 31, 2024, the Company had six officers and a board of directors which comprised three
members. With this segregation, the officers are responsible for managing the day-to-day operations of the
Company while the board of directors advises and monitors the officers.
Compliance
As part of the Mercedes-Benz Group organization, the Company has applied all compliance principles the
Mercedes-Benz Group AG Board of Management has set including an Integrity Code. This Integrity Code is
a set of guidelines for behavior defining a binding framework for the actions of all employees worldwide.
Among other things, the guidelines define correct behavior in international business and in any cases of
conflicts of interest, questions of equal treatment, proscription of corruption, the role of internal control
systems and the duty to comply with applicable law as well as other internal and external regulations.
Risk Management and Internal Control
The risk management system is an integral part of the overall planning, controlling and reporting process.
Its goal is to enable the Company’s management to recognize significant risks at an early stage and to
initiate appropriate countermeasures in a timely manner (see Note 8).
The officers of the Company are responsible for establishing and maintaining adequate internal control
over financial reporting. Internal control over financial reporting is defined as a process designed to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with IFRS as issued by the IASB and includes those
policies and procedures that (1) pertain to the maintenance of records that in reasonable detail accurately
and fairly reflect the transactions and dispositions of the assets of the Company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with IFRS, and that receipts and expenditures of the Company are being made only in
accordance with authorizations of management and directors of the Company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the
Company's assets that could have a material effect on the financial statements.
Accounting Principles
The financial statements of the Company are prepared in accordance with IFRS as issued by the IASB.
Outlook
Management expects profit and loss and equity to be $0 in 2025. This expectation is based on the
assumption of a stable economic development and continuation of the Company’s business model.
7
Report of Independent Auditors
To the Board of Directors of Mercedes-Benz Finance North America LLC
Report on the Audit of the Financial Statements
Opinion
We have audited the accompanying financial statements of Mercedes-Benz Finance North America LLC
(the “Company”), which comprise the statement of financial position as of December 31, 2024, and the
related statements of comprehensive income, changes in equity, and cash flows for the year then ended,
including the related notes (collectively referred to as the “financial statements”).
In our opinion, the accompanying financial statements present fairly, in all material respects, the financial
position of the Company as of December 31, 2024, and the results of its operations and its cash flows for
the year then ended in accordance with IFRS Accounting Standards as issued by the International
Accounting Standards Board (IASB).
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in the United States of
America (US GAAS). Our responsibilities under those standards are further described in the Auditors’
Responsibilities for the Audit of the Financial Statements section of our report. We are required to be
independent of the Company and to meet our other ethical responsibilities, in accordance with the
relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our audit opinion.
Other Matter
The financial statements of the Company as of December 31, 2023 and for the year then ended were
audited by other auditors whose report, dated April 26, 2024, expressed an unmodified opinion on those
statements.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in
accordance with IFRS Accounting Standards as issued by the IASB; and for the design, implementation,
and maintenance of internal control relevant to the preparation and fair presentation of financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Company's ability to
continue as a going concern for at least, but not limited to, twelve months from the end of the reporting
period, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless management either intends to liquidate the Company or to cease operations, or has no
realistic alternative but to do so.
PricewaterhouseCoopers LLP, One Detroit Center, 500 Woodward Avenue, Detroit, MI 48226
T: (313) 394 6000, www.pwc.com/us
8
Auditors’ Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that
includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and
therefore is not a guarantee that an audit conducted in accordance with US GAAS will always detect a
material misstatement when it exists. The risk of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal control. Misstatements are considered material
if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment
made by a reasonable user based on the financial statements.
In performing an audit in accordance with US GAAS, we:
●
Exercise professional judgment and maintain professional skepticism throughout the audit.
●
Identify and assess the risks of material misstatement of the financial statements, whether due to
fraud or error, and design and perform audit procedures responsive to those risks. Such
procedures include examining, on a test basis, evidence regarding the amounts and disclosures in
the financial statements.
●
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control. Accordingly, no such opinion is
expressed.
●
Evaluate the appropriateness of accounting policies used and the reasonableness of significant
accounting estimates made by management, as well as evaluate the overall presentation of the
financial statements.
●
Conclude whether, in our judgment, there are conditions or events, considered in the aggregate,
that raise substantial doubt about the Company’s ability to continue as a going concern for a
reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters, the
planned scope and timing of the audit, significant audit findings, and certain internal control-related
matters that we identified during the audit.
Other Information
Management is responsible for the other information included in the annual report. The other information
comprises the Management Report (consisting of pages 4/28 to 7/28), but does not include the financial
statements and our auditors’ report thereon. Our opinion on the financial statements does not cover the
other information, and we do not express an opinion or any form of assurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information
and consider whether a material inconsistency exists between the other information and the financial
statements or the other information otherwise appears to be materially misstated. If, based on the work
performed, we conclude that an uncorrected material misstatement of the other information exists, we are
required to describe it in our report.
9
Report on Other Legal and Regulatory Requirements – European Single Electronic Format
In connection with the Company’s listing requirements with the Luxembourg Stock Exchange,
management is responsible for presenting the financial statements in compliance with the requirements
set forth in Article 3 of the Delegated Regulation 2019/815 on European Single Electronic Format (ESEF
Regulation). The requirements set forth in the ESEF Regulation that are relevant to the Company relate to
the financial statements being prepared using a valid eXtensible HyperText Markup Language (XHTML)
format. As part of our assessment as to whether the financial statements are prepared, in all material
respects, with the requirements set forth in the ESEF Regulation that are relevant to the Company, we
have performed tests of the compliance of the presentation of the financial statements of the Company
with the requirement to prepare the financial statements using a valid XHTML format as set forth in the
ESEF Regulation. In our opinion, the presentation of the financial statements, identified as
MBFNA_Annual_Report_2024.zip, have been prepared, in all material respects, in accordance with the
requirements set forth in the ESEF Regulation that are relevant to the Company insofar as it relates to the
preparation of the financial statements in a valid XHTML format.
Detroit, Michigan
April 28, 2025
10
Mercedes-Benz Finance North America LLC – Annual Report 2024
(all amounts in thousands of U.S. dollars)
Statement of Comprehensive Income
Year ended December 31,
Note
2024
2023
Interest income – related parties
3
1,241,991
885,585
Interest expense – third parties
6
(1,241,991)
(885,585)
Guarantee fees – MBGAG
5
(28,732)
(21,811)
Net interest expense
(28,732)
(21,811)
Other financial income / (expense), net
4
11
(14)
Administrative expenses
5
(2,880)
(3,027)
Reimbursement of expenses from MBNAC
5
31,601
24,852
Profit and loss
-
-
Other comprehensive income
-
-
Total comprehensive income
-
-
The accompanying notes on pages 15 to 28 are an integral part of the financial statements.
11
Mercedes-Benz Finance North America LLC – Annual Report 2024
(all amounts in thousands of U.S. dollars)
Statement of Financial Position
December 31,
Note
2024
2023
Assets
Receivables from related parties
5
20,661,557
15,321,747
Total non-current assets
20,661,557
15,321,747
Receivables from related parties
5
5,208,225
7,602,391
Accrued interest income from MBNAC
5
387,532
253,548
Total current assets
5,595,757
7,855,939
Total assets
26,257,314
23,177,686
Equity and liabilities
Total equity
-
-
Notes and bonds payable
7
20,661,557
15,321,747
Total non-current liabilities
20,661,557
15,321,747
Notes and bonds payable
7
4,347,106
4,197,484
Commercial paper
7
838,262
3,389,509
Payables to related parties
5, 7
22,609
15,398
Other provisions
7
248
-
Accrued interest expense
7
387,532
253,548
Total current liabilities
5,595,757
7,855,939
Total liabilities
26,257,314
23,177,686
Total equity and liabilities
26,257,314
23,177,686
The accompanying notes on pages 15 to 28 are an integral part of the financial statements.
12
Mercedes-Benz Finance North America LLC – Annual Report 2024
(all amounts in thousands of U.S. dollars)
Statement of Changes in Equity
Member’s
Retained
Other
Total
Investment
Earnings
Reserves
Equity
Balance at January 1, 2023
-
-
-
-
Profit and loss
-
-
-
-
Total comprehensive income
-
-
-
-
Transactions with members
-
-
-
-
directly recognized in equity
Balance at December 31, 2023
-
-
-
-
Profit and loss
-
-
-
-
Total comprehensive income
-
-
-
-
Transactions with members
-
-
-
-
directly recognized in equity
Balance at December 31, 2024
-
-
-
-
The accompanying notes on pages 15 to 28 are an integral part of the financial statements.
13
Mercedes-Benz Finance North America LLC – Annual Report 2024
(all amounts in thousands of U.S. dollars)
Statement of Cash Flows
Year ended December 31,
Note
2024 2023
Profit and loss
-
-
Adjustments for
Foreign exchange (gains)/losses
4
(11)
14
Non-cash interest expense
7,696
29,585
Changes in
Receivables from related parties
5
(2,945,633)
(4,969,364)
Payables to related parties
5
7,211
3,428
Other provisions
248
0
Net cash provided by/(used for) operating activities
(2,930,489)
(4,936,337)
Net cash provided by/(used for) investing activities
-
-
Issuances of notes and bonds payable
7
9,670,476
6,477,364
Repayments of notes and bonds payable
7
(4,200,000)
(2,925,000)
Proceeds from issuances of commercial paper, net2
7
-
1,246,124
Repayments of commercial paper, net2
7
(2,402,137)
-
Proceeds from issuances of commercial paper with an initial
7
139,837
151,636
maturity of >3 months
Repayments of commercial paper with an initial maturity of >3
7
months
(277,687)
(13,787)
Net cash provided by/(used for) financing activities
2,930,489
4,936,337
Net increase/(decrease) in cash and cash equivalents
-
-
Cash and cash equivalents at the beginning of the period
-
-
Cash and cash equivalents at the end of the period
-
-
Supplemental information:1
Interest paid
(1,100,311)
(772,825)
Interest received
1,100,311
772,825
1 All cash flows from interest are included in cash used in operating activities. The Company does not have any cash flows from
income taxes and dividends.
2 Cash flows from commercial paper with initial time to maturity less than 3 months are netted.
The accompanying notes on pages 15 to 28 are an integral part of the financial statements.
14
Mercedes-Benz Finance North America LLC – Annual Report 2024
(all amounts in thousands of U.S. dollars)
Notes to the Financial Statements
1.
General information
Mercedes-Benz Finance North America LLC (“MBFNA” or the “Company”) is a limited liability company
organized under the laws of Delaware. The Company is a wholly-owned subsidiary of Mercedes-Benz North
America Corporation (“MBNAC”), which is a wholly-owned subsidiary of Mercedes-Benz Capital
Investments B.V. (“MBCI”), which is a wholly-owned subsidiary of Mercedes-Benz AG (“MBAG”), which in
turn is a wholly-owned subsidiary of Mercedes-Benz Group AG (“MBGAG”). Its registered office is located at
1209 Orange Street, Wilmington, Delaware 19801, USA.
MBFNA accesses US and foreign capital markets to raise funds, which it lends to MBNAC through a
consolidated funding and cash management system.
In the event of non-payment by MBFNA, MBGAG irrevocably and unconditionally guarantees the debt
holders the payment of the amounts corresponding to the principal of, and interest on the respective notes
and bonds and commercial paper as they become due. MBFNA and MBNAC entered into intercompany
loan agreements which are intended to mirror MBFNA’s external borrowings such that interest expense
with third parties is offset by corresponding interest income from MBNAC. MBFNA has one reportable
segment. The Statement of Comprehensive Income and Statement of Financial Position is provided to and
reviewed by MBFNA’s Chief Executive Officer once a year.
The Company’s ultimate parent MBGAG produces consolidated financial statements that are available for
public use.
On April 28, 2025, the Board of Directors of MBFNA authorized the financial statements for issue.
2.
Basis of preparation
(a)
Applied IFRS Accounting Standards
The financial statements have been prepared in accordance with IFRS Accounting Standards as issued by
the International Accounting Standards Board (IASB).
(b)
IFRS Accounting Standards issued and adopted in the reporting period
The following amended standards did not have an impact on MBFNA’s financial statements:
•
Classification of Liabilities as Current and Non-Current (Amendments to IAS 1)
•
Supplier Finance Arrangements (Amendments to IAS 7 and IFRS 7)
•
Lease Liability in a Sale-and-Leaseback (Amendments to IFRS 16)
15
Mercedes-Benz Finance North America LLC – Annual Report 2024
(all amounts in thousands of U.S. dollars)
(c)
IFRS Accounting Standards issued not effective
New accounting standards are effective for annual periods beginning after January 1, 2025 and earlier
adoption is permitted. The items below are not expected to have a significant or material impact on the
financial statements and were not early adopted:
•
Lack of Exchangeability (Amendments to IAS 21) – Effective January 1, 2025
•
Classification and Measurement of Financial Instruments (Amendments to IFRS 9 & IFRS 7) –
Effective January 1, 2026
•
IFRS 19 Subsidiaries without Public Accountability: Disclosures – Effective January 1, 2027
In April 2024, the IASB issued the standard IFRS 18 Presentation and Disclosure in Financial Statements.
The aim of the standard is to improve the presentation of financial information as well as to increase the
transparency and comparability of the financial statements. IFRS 18 will in the future replace IAS 1
Presentation of Financial Statements. The application of IFRS 18 is mandatory for reporting periods
beginning on or after January 1, 2027. Earlier application is permitted but not planned for MBFNA. MBFNA
currently does not expect any material impacts on profitability, liquidity and capital resources and financial
position due to the application of IFRS 18.
(d)
Basis of measurement
The financial statements have been prepared on the historical cost basis.
(e) Functional and presentation currency
These financial statements are presented in U.S. dollars (“$”), which is the Company’s functional currency.
The Company reports the financial information in thousands of U.S. dollars, except where indicated
otherwise.
(f)
Presentation in the statement of financial position
Presentation in the statement of financial position differentiates between current and non-current assets
and liabilities. Assets and liabilities are classified as current if they mature within one year.
(g)
Accounting estimates and management judgements
The preparation of financial statements requires management to make estimates and judgements that
affect the application of accounting policies and the reported amounts of assets, liabilities, income, and
expenses. Actual results may differ from these estimates. Management’s most important estimates relate
to the fair values of the Company’s notes and bonds payable and receivables from MBNAC. Refer to Note 7
for additional information.
Estimates and judgements are reviewed on an ongoing basis. Revisions to accounting estimates are
recognized in the period in which the estimate is revised and are applied prospectively.
Management judgements
Recoverability of receivables from related parties
At each reporting date, the carrying amounts of receivables from related parties are evaluated to determine
whether there is an objective significant increase in credit risk since initial recognition. Through December
31, 2024, the credit risk on receivables from related parties has not increased significantly since initial
recognition. Therefore, the loss allowance for receivables from related parties would be measured at an
amount equal to 12-month expected credit losses. Receivables from related parties are considered to have
a low risk of default. Management considers the 12-month expected credit losses for receivables from
related parties as immaterial.
16
Mercedes-Benz Finance North America LLC – Annual Report 2024
(all amounts in thousands of U.S. dollars)
Estimates
Significant areas of estimation uncertainty in applying accounting policies that have the most significant
effect on the amounts disclosed in the financial statements relate to the fair value measurements for the
Company’s financial instruments.
Fair value of financial instruments
The Company measures fair values of its financial instruments using the following hierarchy of methods:
•
Quoted market prices in an active market for an identical instrument.
•
Valuation techniques based on observable inputs. This category includes instruments valued using
quoted market prices in active markets for similar instruments; quoted prices for similar
instruments in markets that are considered less than active; or other valuation techniques where
all significant inputs are directly or indirectly observable from market data.
Fair values of financial assets and financial liabilities that are traded in active markets are based on quoted
market prices. For all other financial instruments, the Company determines fair values using valuation
techniques. In particular, the Company uses widely recognized valuation models for determining the fair
value of common and simpler financial instruments that use only observable market data and require little
management judgment. Observable prices and model inputs are usually available in the market for listed
debt securities. Availability of observable market prices and model inputs reduces the need for
management judgment and estimation and also reduces the uncertainty associated with determination of
fair values. Availability of observable market prices and inputs varies depending on the products and
markets and is prone to changes based on specific events and general conditions in the financial markets.
3.
Material accounting policies
(a)
Interest income and expense
Interest income and expense are recognized in the statement of comprehensive income using the effective
interest method. The effective interest rate is the rate that exactly discounts the estimated future cash
payments or receipts through the expected life of the financial asset or liability (or, where appropriate, a
shorter period) to the carrying amount of the financial asset or liability. When calculating the effective
interest rate, the Company estimates future cash flows considering all contractual terms of the financial
instrument, except future credit losses.
The calculation of the effective interest rate includes all fees paid or received that are an integral part of
the effective interest rate. Transaction costs include incremental costs that are directly attributable to the
acquisition or issue of a financial asset or liability.
(b)
Income taxes
The Company is a single member limited liability company. As such, the Company is not a taxable entity for
federal and state income tax purposes. Rather, taxable income or loss is included in its member's federal
and state income tax returns and any resulting income taxes are paid by the member.
(c)
Transactions with related parties
MBFNA is wholly-owned by MBNAC and indirectly by MBGAG. Transactions with related parties in the
normal course of business are recorded at the agreed upon exchange amount. Financial receivables and
payables with related parties are entered into at prevailing market terms at the time of the transaction.
17
Mercedes-Benz Finance North America LLC – Annual Report 2024
(all amounts in thousands of U.S. dollars)
(d)
Financial assets
Financial assets consist primarily of receivables from MBNAC, which arise from intercompany loans. The
classification of financial instruments is based on the business model in which these instruments are held
and on their contractual cash flows.
Financial assets that give rise to cash flows consisting solely of payments of principal and interest (“SPPI”)
are classified in accordance with MBFNA’s business model for holding these instruments. These business
models are managed principally based on interest-rate structure and credit risk.
For the purposes of this assessment, “principal” is defined as the fair value of the financial assets on initial
recognition. “Interest” is defined as consideration for the time value of money and for the credit risk
associated with the principal amount outstanding during a particular period of time. In assessing whether
the contractual cash flows are solely payments of principal and interest, MBFNA considers the contractual
terms of the instrument. This includes assessing whether the financial asset contains a contractual term
that could change the timing or amount of contractual cash flows such that it would not meet this
condition.
In making this assessment, MBFNA considers:
•
contingent events that would change the amount or timing of cash flows
•
terms that may adjust the contractual coupon rate, including variable-rate features
•
prepayment and extension features
•
terms that limit MBFNA’s claim to cash flows of specified assets (e.g., non-recourse features)
The determination of the business model is made at the portfolio level and is based on management’s
intention and past transaction patterns. Assessments of the contractual cash flows are made on an
instrument-by-instrument basis.
Financial assets at amortized cost
Financial assets at amortized cost are non-derivative financial assets with contractual cash flows that
consist solely of payments of principal and interest on the nominal amount outstanding and which are held
with the aim of collecting the contractual cash flows (business model “hold to collect”).
After initial recognition, financial assets at amortized cost are subsequently carried at amortized cost using
the effective interest method less any loss allowances. Gains and losses are recognized in profit or loss
when the financial assets at amortized cost are impaired or derecognized. Interest effects on the
application of the effective interest method are also recognized in profit or loss.
Impairment of financial assets
MBFNA recognizes loss allowances for expected credit losses for financial assets other than those to be
measured at fair value through profit or loss. The loss allowances for financial assets that are determined
to have low credit risk at the reporting date or for which credit risk has not increased significantly since
recognition (including receivable from related parties) are measured at 12-month expected credit losses.
When determining if the credit risk of a financial asset has increased significantly MBFNA considers
reasonable and supportable information that is relevant and available without undue cost or effort,
including quantitative and qualitative information based on historical experience and forward-looking
information.
18
Mercedes-Benz Finance North America LLC – Annual Report 2024
(all amounts in thousands of U.S. dollars)
MBFNA assumes that the credit risk on a financial asset has increased significantly if it is more than 30
days past due.
Measurement of expected credit losses
Expected credit losses are measured as the probability-weighted present value of all cash shortfalls over
the expected life of each financial asset. 12-months expected credit losses are a portion of expected credit
losses that result from default events that are possible within the next 12 months after the reporting date.
Expected credit losses are discounted at the effective interest rate of the financial asset.
A financial instrument is written off when there is no reasonable expectation of recovering it in its entirety
or a portion thereof, for example at the end of insolvency proceedings or after a court decision of
uncollectibility.
(e)
Financial liabilities
Financial liabilities include notes and bonds payable, commercial paper, payables to related parties, and
accrued interest. New notes and bonds and commercial paper issuances are recognized at fair value based
on quoted prices on the day of issuance minus transaction costs, if any. After initial recognition at fair
value minus transaction costs, they are subsequently measured at amortized cost using the effective
interest method.
4.
Other financial income/(expense), net
Other financial income/(expense) includes foreign exchange from intercompany cash balances and
invoices in EUR:
2024
2023
Result of foreign exchange transactions
11
(14)
Total
11
(14)
5.
Transactions with related parties
The following table sets forth amounts receivable from related parties:
December 31,
2024
2023
Mercedes-Benz North America Corporation
25,862,501
22,921,015
Mercedes-Benz North America Corporation - accrued
387,532
253,548
interest
Mercedes-Benz North America Finance Corporation
7,281
3,123
(MBNAF)
Total
26,257,314
23,177,686
The receivables bear interest at fixed and variable rates ranging from 1.45% to 8.50%, with a weighted
average interest rate of 4.75%. Variable rates are re-priced on a 3-month basis. Interest income is recorded
using the effective interest method. The Company recorded interest income from MBNAC of $1,241,991 in
2024 and $885,585 in 2023. The Company holds receivables with MBNAF, the US In-House Bank, and
recorded interest income of $244 in 2024 and $135 in 2023.
19
Mercedes-Benz Finance North America LLC – Annual Report 2024
(all amounts in thousands of U.S. dollars)
As of December 31, 2024, aggregate annual maturities of receivables from related parties were as follows:
Year
Amount
2025
5,595,757
2026
6,190,692
2027
3,989,128
≥2028
10,481,737
Total
26,257,314
As of December 31, 2023, aggregate annual maturities of receivables from related parties were as follows:
Year
Amount
2024
7,855,939
2025
4,342,556
2026
2,743,465
≥2027
8,235,726
Total
23,177,686
The following table sets forth amounts payable to related parties which result from guarantee fees:
December 31,
2024
2023
Mercedes-Benz Group AG
22,609
15,398
Total
22,609
15,398
MBFNA is charged fees for the full and unconditional guarantees on its outstanding notes and bonds and
commercial paper programs by MBGAG. These fees are calculated as a set percentage of the outstanding
notes and bonds and commercial paper at the end of each month at any given year. These guarantee fees
were $28,732 and $21,811 for the years ended December 31, 2024 and 2023, respectively.
MBFNA is charged for administrative overhead expenses by MBNAC. These expenses were $2,023 and
$1,994 for the years ended December 31, 2024 and 2023, respectively, and are included in administrative
expenses of $2,880 and $3,027 for the years ended December 31, 2024 and 2023 in the Statement of
Comprehensive Income.
MBFNA and MBNAC are also parties to agreements pursuant to which MBNAC reimburses MBFNA for any
and all expenses incurred in connection with the administration of MBFNA’s notes and bonds and
commercial paper programs. These reimbursements are recognized in income - Reimbursement of
expenses from MBNAC.
The receivable for reimbursement of expenses from MBNAC amounted to $15,576 as of December 31,
2024 and $12,276 as of December 31, 2023.
There are no related party transactions with key management personnel as defined in IAS 24.
20
Mercedes-Benz Finance North America LLC – Annual Report 2024
(all amounts in thousands of U.S. dollars)
6.
Statement of cash flows
In 2024 the changes in liabilities arising from financing activities were as follows.
Financing liabilities
Notes and bonds Commercial
Total
payable
paper
Balance at January 1, 20241
19,772,779
3,389,509
23,162,288
Proceeds from issuances
9,670,476
139,837
9,810,313
Repayments
(4,200,000)
(2,679,824)
(6,879,824)
Total changes from financing cash flows
5,470,476
(2,539,987)
2,930,489
Interest expense
1,065,481
176,510
1,241,991
Interest paid
(912,541)
(187,770)
(1,100,311)
Total liability-related other changes
152,940
(11,260)
141,680
Balance at December 31, 20242
25,396,195
838,262
26,234,457
1 Notes and bonds payable balance at January 1, 2024 includes accrued interest in the amount of $253,548.
2 Notes and bonds payable balance at December 31, 2024 includes accrued interest in the amount of $387,532.
In 2023 the changes in liabilities arising from financing activities were as follows.
Financing liabilities
Notes and bonds Commercial
Total
payable
paper
Balance at January 1, 20231
16,121,247
1,991,944
18,113,191
Proceeds from issuances
6,477,364
1,397,760
7,875,124
Repayments
(2,925,000)
(13,787)
(2,938,787)
Total changes from financing cash flows
3,552,364
1,383,973
4,936,337
Interest expense
718,212
167,373
885,585
Interest paid
(619,044)
(153,781)
(772,825)
Total liability-related other changes
99,168
13,592
112,760
Balance at December 31, 20232
19,772,779
3,389,509
23,162,288
1 Notes and bonds payable balance at January 1, 2023 includes accrued interest in the amount of $170,373.
2 Notes and bonds payable balance at December 31, 2023 includes accrued interest in the amount of $253,548.
21
Mercedes-Benz Finance North America LLC – Annual Report 2024
(all amounts in thousands of U.S. dollars)
7.
Financial instruments
(a)
Carrying amounts and fair values of financial instruments
The following table shows the carrying amounts and fair values of the Company’s financial instruments. The
fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the measurement date. Given the varying
influencing factors, the reported fair values can only be viewed as indicators of the prices that may actually
be achieved on the market. The fair values of financial instruments were calculated on the basis of market
information available on the balance sheet date.
December 31, 2024
December 31, 2023
Carrying
Fair value
Carrying
Fair value
amount
amount
Financial assets at amortized
cost
Receivables from related
25,869,782
25,858,729
22,924,138
23,114,798
parties
Accrued interest income
387,532
387,532
253,548
253,548
from MBNAC
Total financial assets at
26,257,314
26,246,261
23,177,686
23,368,346
amortized cost
Total financial assets
26,257,314 26,246,261 23,177,686 23,368,346
Financial liabilities carried at
amortized cost
Notes and bonds payable
25,008,663
24,997,858
19,519,231
19,709,891
Commercial paper
838,262
838,262
3,389,509
3,389,509
Payables to related parties
22,609
22,609
15,398
15,398
Accrued interest expense
387,532
387,532
253,548
253,548
Total financial liabilities
26,257,066
26,246,261
23,177,686
23,368,346
carried at amortized cost
Total financial liabilities
26,257,066 26,246,261 23,177,686 23,368,346
22
Mercedes-Benz Finance North America LLC – Annual Report 2024
(all amounts in thousands of U.S. dollars)
Financial assets and liabilities not measured at fair value are classified into the following fair value
hierarchy:
December 31, 2024
December 31, 2023
Total
Level 11 Level 22
Level 33
Total
Level 11
Level 22
Level 33
Financial assets at
26,246,261
-
26,246,261
-
23,368,346
-
23,368,346
-
amortized cost
Financial liabilities
carried at
26,246,261
19,995,671
6,250,590
-
23,368,346
19,124,430
4,243,916
-
amortized cost
thereof notes
24,997,858
19,696,875
5,300,983
-
19,709,891
19,124,430
585,461
-
and bonds
thereof other
1,248,403
298,796
949,607
-
3,658,455
-
3,658,455
-
financial
liabilities
1 Fair value measurement based on quoted prices (unadjusted) in active markets for identical assets or liabilities.
2 Fair value measurement based on inputs for the asset or liability that are observable on active markets either directly (i.e. as prices)
or indirectly (i.e. derived from prices).
3 Fair value measurement based on inputs for the asset or liability that are not observable market data.
The fair values of financial instruments were calculated on the basis of market information available at the
reporting date using the methods and assumptions presented below. Due to the short nature of accrued
interest income, accrued interest expense, and payables to related parties, management assumes that
their fair values are equal to the carrying amounts.
Receivables from related parties
MBFNA holds receivables from MBNAC within a business model whose objective is to collect contractual
cash flows. No material impairments have been recognized, and the Company does not believe that these
receivables are at risk of being impaired. The Company believes that the fair value of the receivables from
MBNAC approximates the fair value of the external notes and bonds payable at December 31, 2024 and
2023, as the terms and interest rates of the receivables from MBNAC are intended to mirror MBFNA’s
external borrowings such that interest expense and debt maturities with third parties are offset by
corresponding interest income and loan maturities from MBNAC.
Notes and bonds payable
When available, the Company uses quoted market prices for its issued notes and bonds and classifies such
instruments as Level 1 in the fair value hierarchy. If quoted market prices are not available or for
instruments with quoted prices in markets that are considered less than active, the fair value of notes and
bonds is determined based on internal models calculating present values of the estimated cash flows and
using observable inputs such as interest rates for similar types of instruments. Notes and bonds measured
using simple proprietary models based on observable inputs are classified as Level 2 in the fair value
hierarchy.
Other financial liabilities
Because of the short maturities of these financial instruments, the carrying amount approximates fair
value.
23
Mercedes-Benz Finance North America LLC – Annual Report 2024
(all amounts in thousands of U.S. dollars)
(b)
Notes and bonds payable
MBFNA’s obligations under the notes and bonds program are fully and unconditionally guaranteed by its
ultimate parent company, MBGAG. Contemporaneously, MBFNA and MBNAC entered into an agreement
according to which MBNAC reimburses MBFNA for any and all fees incurred by MBFNA in the course of the
administration of the program. Terms and conditions of notes and bonds payable outstanding at December
31, 2024 are as follows:
Year of
Nominal interest
Face value
Carrying amount
US-Dollar Notes and Bonds
Currency
maturity
rate
Medium Term Note
USD
2.125%
2025
450,000
449,838
Medium Term Note
USD
SOFR + .93%
2025
300,000
299,934
Medium Term Note
USD
4.950%
2025
700,000
699,758
Medium Term Note
USD
3.300%
2025
650,000
649,777
Medium Term Note
USD
SOFR + .57%
2025
400,000
399,790
Medium Term Note
USD
5.375%
2025
700,000
699,399
Medium Term Note
USD
3.500%
2025
500,000
499,676
Medium Term Note
USD
5.375%
2025
650,000
648,934
Medium Term Note
USD
SOFR + .67%
2026
650,000
649,400
Medium Term Note
USD
4.900%
2026
700,000
699,094
Medium Term Note
USD
1.450%
2026
1,000,000
999,049
Medium Term Note
USD
4.800%
2026
1,000,000
998,480
Medium Term Note
USD
4.875%
2026
750,000
748,775
Medium Term Note
USD
SOFR + .63%
2026
750,000
748,932
Medium Term Note
USD
5.200%
2026
750,000
748,554
Medium Term Note
USD
4.800%
2026
600,000
598,409
Medium Term Note
USD
3.450%
2027
750,000
748,709
Medium Term Note
USD
4.800%
2027
800,000
798,207
Medium Term Note
USD
4.750%
2027
700,000
697,887
Medium Term Note
USD
4.900%
2027
700,000
697,779
Medium Term Note
USD
SOFR + .85%
2027
550,000
548,946
Medium Term Note
USD
5.250%
2027
500,000
497,601
Medium Term Note
USD
3.750%
2028
625,000
624,245
Medium Term Note
USD
3.750%
2028
300,000
297,440
Medium Term Note
USD
4.800%
2028
1,000,000
997,314
Medium Term Note
USD
5.100%
2028
900,000
897,365
Medium Term Note
USD
4.850%
2029
850,000
847,285
Medium Term Note
USD
4.300%
2029
500,000
498,652
Medium Term Note
USD
4.800%
2029
850,000
846,742
Medium Term Note
USD
3.100%
2029
500,000
498,229
Medium Term Note
USD
5.100%
2029
600,000
597,977
Medium Term Note
USD
2.625%
2030
450,000
448,169
Bond
USD
8.500%
2031
1,500,000
1,490,485
Medium Term Note
USD
2.450%
2031
500,000
498,794
Medium Term Note
USD
5.050%
2033
750,000
744,917
Medium Term Note
USD
5.000%
2034
750,000
746,994
Medium Term Note
USD
5.125%
2034
450,000
447,127
25,075,000
25,008,663
Total
24
Mercedes-Benz Finance North America LLC – Annual Report 2024
(all amounts in thousands of U.S. dollars)
Terms and conditions of notes and bonds payable outstanding at December 31, 2023 are as follows:
Year of
Nominal interest
Face value
Carrying amount
US-Dollar Notes and Bonds
Currency
maturity
rate
Medium Term Note
USD
3.650%
2024
600,000
599,825
Medium Term Note
USD
0.750%
2024
1,500,000
1,499,640
Medium Term Note
USD
2.700%
2024
750,000
749,619
Medium Term Note
USD
3.250%
2024
500,000
499,535
Medium Term Note
USD
5.500%
2024
850,000
848,865
Medium Term Note
USD
2.125%
2025
450,000
449,185
Medium Term Note
USD
SOFR + 0.93%
2025
300,000
299,664
Medium Term Note
USD
4.950%
2025
700,000
699,028
Medium Term Note
USD
3.300%
2025
650,000
649,404
Medium Term Note
USD
SOFR + 0.57%
2025
400,000
399,428
Medium Term Note
USD
5.375%
2025
700,000
698,648
Medium Term Note
USD
3.500%
2025
500,000
499,242
Medium Term Note
USD
5.375%
2025
650,000
647,957
Medium Term Note
USD
1.450%
2026
1,000,000
998,289
Medium Term Note
USD
4.800%
2026
1,000,000
997,385
Medium Term Note
USD
5.200%
2026
750,000
747,791
Medium Term Note
USD
3.450%
2027
750,000
748,138
Medium Term Note
USD
5.250%
2027
500,000
496,890
Medium Term Note
USD
3.750%
2028
625,000
624,049
Medium Term Note
USD
3.750%
2028
300,000
296,703
Medium Term Note
USD
4.800%
2028
1,000,000
996,589
Medium Term Note
USD
5.100%
2028
900,000
896,756
Medium Term Note
USD
4.300%
2029
500,000
498,380
Medium Term Note
USD
3.100%
2029
500,000
497,890
Medium Term Note
USD
2.625%
2030
450,000
447,852
Bond
USD
8.500%
2031
1,500,000
1,489,387
Medium Term Note
USD
2.450%
2031
500,000
498,622
Medium Term Note
USD
5.050%
2033
750,000
744,470
Total
19,575,000
19,519,231
(c)
Commercial paper
In February 2011, MBFNA entered into a $3,000,000 private placement of a commercial paper program.
The commercial paper balance was $838,262 at December 31, 2024 compared to $3,389,509 at
December 31, 2023. Fixed interest rates ranged from 4.63% to 4.76% and maturity dates ranged from
January 3, 2025 to January 17, 2025. MBFNA’s obligations under the commercial paper program are fully
and unconditionally guaranteed by its ultimate parent company, MBGAG.
8.
Management of financial risks
(a)
Introduction
The global nature of the Mercedes-Benz Group businesses in the US exposes MBFNA indirectly to the risks
listed below:
•
credit risk
•
liquidity risk
•
finance market risks
25
Mercedes-Benz Finance North America LLC – Annual Report 2024
(all amounts in thousands of U.S. dollars)
However, the resulting effects of these risks on the Company’s financial position, cash flows and
profitability are all offset by the existing reimbursement agreements between MBFNA and MBNAC as well
as the unconditional guarantee issued by MBGAG for MBFNA’s outstanding notes and bonds and
commercial paper. As a result, the Company is exposed to MBNAC’s, and indirectly to its ultimate parent
MBGAG’s, intent and ability to affect the repayment of these receivables and honor the unconditional
guarantee.
This note presents information about the Company’s exposure to each of the above risks, and the
objectives, policies and processes for measuring and managing risk. As part of its policies and processes
for managing and measuring, if necessary, these risks, the Company monitors MBGAG’s liquidity position.
MBGAG’s financial statements are publicly available.
Debt ratings are an assessment by the rating agencies of the credit risk associated with MBGAG and are
based on information provided by MBGAG or other sources. Lower ratings generally result in higher
borrowing costs and reduced access to capital markets.
In the year 2024, the credit rating of Mercedes-Benz Group AG remained unchanged with all the agencies
we have engaged to provide ratings as of December 31, 2024. In the course of the year, S&P Global
Ratings (S&P), Moody’s Ratings (Moody’s) and Morningstar DBRS (DBRS) confirmed their long-term and
short-term ratings for the Group. At the end of 2024, therefore, the outlook for Mercedes-Benz Group was
assessed as “stable” by the three agencies.
MBGAG’s ratings as of December 31, 2024 were as follows:
S&P
Moody’s
DBRS
Short-term debt
A-1
P-1
R-1(low)
Long-term debt
A
A2
A
MBGAG’s ratings as of December 31, 2023 were as follows:
S&P
Moody’s
DBRS
Short-term debt
A-1
P-1
R-1(low)
Long-term debt
A
A2
A
(b)
General information on financial risks
MBFNA applies the guidelines established by its ultimate parent company, MBGAG, and when necessary,
establishes its own guidelines unique to the transactions of the Company. The guidelines are established
for risk controlling procedures and for the use of financial instruments, including a clear segregation of
duties with regard to operating financial activities, settlement, accounting and controlling of financial
instruments. The guidelines upon which the Company’s risk management processes are based are
designed to identify and analyze these risks, to set appropriate risk limits and controls and to monitor the
risks by means of reliable and up-to-date administrative and information systems. The guidelines and
systems are regularly reviewed and adjusted to changes in markets and products.
(c)
Credit risk
Credit risk is the risk of economic loss arising from counterparty’s failure to repay or service debt in
accordance with the contractual terms. Credit risk encompasses both the direct risk of default and the risk
of a deterioration of creditworthiness as well as concentration risks.
The Company's assets consist primarily of receivables from MBNAC. As a result, the Company is exposed
to MBNAC’s, and indirectly to its ultimate parent MBGAG’s, intent and ability to affect the repayment of
these receivables. The maximum exposure to credit risk at the reporting date from receivables is equal to
26
Mercedes-Benz Finance North America LLC – Annual Report 2024
(all amounts in thousands of U.S. dollars)
the carrying amount, which is equal to the total assets of the Company. As part of its policies and
processes for managing and measuring, if necessary, the Company’s exposure to credit risk, the Company
monitors MBGAG’s liquidity position.
(d)
Liquidity risk
Liquidity risk encompasses the risk that the Company will encounter difficulty in meeting obligations
associated with its financial liabilities in full when due. MBFNA’s source of liquidity is its external
borrowings. The funds are primarily used to finance working capital and capital expenditure requirements
as well as the cash needs of the lease and financing business of the MBNAC subsidiaries.
Depending on its cash needs and market conditions, MBFNA issues bonds and notes and commercial
paper in various currencies. Adverse changes in the capital markets could increase MBFNA’s funding costs
and limit the Company’s financial flexibility.
In June 2024, the Mercedes-Benz Group has renewed its syndicated credit facility with a volume of €11
billion with a consortium of international banks. It grants the Mercedes-Benz Group additional financial
flexibility until at least the year 2029. The syndicated credit line had not been utilized as of the reporting
date.
The liquidity runoff shown in the following table provides an insight into how the liquidity situation of the
Company is affected by the cash flows of financial liabilities as of December 31, 2024. It comprises a
runoff of the undiscounted contractual principal and interest cash outflows of the financing liabilities and
undiscounted payments from other financing liabilities.
Total
2025
2026
2027
2028
2029
> 2030
Notes and bonds
25,075,000
4,350,000
6,200,000
4,000,000
2,825,000
3,300,000
4,400,000
– principal
Notes and bonds
4,211,050
1,125,488
898,859
680,477
486,869
368,263
651,094
– interest
Commercial
839,350
839,350
-
-
-
-
-
paper
22,609
Payables to
22,609
-
-
-
-
-
related parties
Total
30,148,009
6,337,447
7,098,859
4,680,477
3,311,869
3,668,263
5,051,094
The liquidity runoff as of December 31, 2023 is shown in the following table.
Total
2024
2025
2026
2027
2028
> 2029
Notes and bonds
19,575,000
4,200,000
4,350,000
2,750,000
1,250,000
2,825,000
4,200,000
– principal
Notes and bonds
3,209,617
793,466
648,138
477,400
394,213
313,681
582,719
– interest
Commercial
3,402,630
3,402,630
-
-
-
-
-
paper
Payables to
15,398
15,398
-
-
-
-
-
related parties
Total
26,202,645
8,411,494
4,998,138
3,227,400
1,644,213
3,138,681
4,782,719
Future cash flows for variable rate instruments are estimated using forward rates.
27
Mercedes-Benz Finance North America LLC – Annual Report 2024
(all amounts in thousands of U.S. dollars)
(e)
Finance market risks
Finance market risks are the risks that changes in market prices, such as interest rates and foreign
exchange rates, will affect the Company’s income or the value of its financial instruments. The objective of
finance market risks management is to manage and control market risk exposures within acceptable
parameters, while optimizing the return on risk.
The global nature of the Mercedes-Benz Group businesses in the US exposes MBFNA indirectly to market
risks resulting from foreign currency exchange rates and changes in interest rates. However, the resulting
effects of these market risks on the Company’s financial position, cash flows and profitability are all offset
by the existing reimbursement agreements between MBFNA and MBNAC. MBFNA maintains risk
management control systems independent of Corporate Treasury.
The impact of current macroeconomic and geopolitical developments are further discussed in the
Management Report under Industry Risks.
9.
Related party relationships
For transactions and balances with other MBGAG subsidiaries, refer to Note 5.
The authority and responsibility for planning, directing, and controlling the activities of MBFNA resides
within MBGAG’s Corporate Treasury and Tax departments rather than with the directors of the entity.
Accordingly, the Company does not have key management personnel.
10.
Capital management
MBFNA is subject to the capital management at the MBGAG parent level. MBGAG uses net assets as its
basis for capital management. Net assets are managed on a divisional level at MBGAG rather than at a
regional or company level. Accordingly, the net assets of the Company are not subject to review for capital
management, but rather are reviewed as part of the net assets of the MBGAG divisions to which the
Company’s net assets are allocated. Details regarding how MBGAG is meeting its objectives for managing
capital can be found in Note 35 of the Mercedes-Benz Group 2024 Consolidated Financial Statements.
The Company is part of the worldwide financial management that is performed for all Mercedes-Benz
Group entities by MBGAG’s Corporate Treasury. Financial management operates within a framework of
guidelines, limits and benchmarks; for MBFNA, these are described in more detail in Note 8.
28