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Daimler chief Dieter Zetsche told the group's annual meeting today that spending on research and development would increase in the next two years as the group focused on providing sustainable technologies.

He said investment over the period to 2010 would be almost €14 billion. The group spent €4.1 million on R&D in 2007.

Zetsche said the research spending was important because "there is no clear route to the mobility of tomorrow". The group would continue to investigate three potential technology strands: innovative combustion engines, hybridisation of combustion engines with electric motors, and zero-emission vehicles with fuel cells and batteries.

But Daimler would not be changing into a manufacturer of mainly smaller cars, he said. "Our route to sustainable mobility is based on technological innovations, not renunciation," Zetsche said. The company would introduce a model in each of its core series that would be "a leader in terms of consumption and emissions", he said.

Zetsche presented results for 2007 that saw pretax profits of €8.7 billion, marginally above the target of €8.5 billion. The return on net assets of 10.5 per cent was "significantly" higher than the 7 per cent target, he said.

For 2010, Daimler has set a target of an average return on sales of 9 per cent, with the cars business expected to produce 10 per cent and the trucks business 8 per cent.