Costs at Mercedes Car Group have been reduced by over EUR7bn as a result of its CORE (Costs Down, Revenue up, Execution) programme, Daimler said on Wednesday.
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The programme was launched in February 2005 to improve the competitiveness of Mercedes-Benz and to achieve a return on sales of at least 7% by 2007. It was originally scheduled to be completed on 31 December 31 this year but, with almost all of the measures implemented, it will now be concluded in a few days on 30 September.
As a result, Mercedes Car Group is now planning to increase return on sales to 10% by 2010 at the latest from the present circa-8% which, according to dpa-AFX, is exceeded only by Toyota.
In a statement, Mercedes said that the CORE programme has involved the implementation of more than 43,000 measures. In 2007, these led to savings and revenue improvements of EUR7.1bn compared with 2004.
During the first phase of CORE, “quick wins” were achieved through measures to be implemented in the short term, which were focused on: reducing costs for materials, IT and travel and consolidating and simplifying freight purchasing. In addition, vehicle and component projects were evaluated and adapted, for example, the decision to produce the Mercedes-Benz GLK compact SUV.
The second phase of CORE included long-term workforce adjustments including 9,700 employees taking severance packages. This represented around 8% of the CORE cost savings.
Other cost saving methods include increased modularisation with modules shared across vehicles. A total of 110 modules were defined.
Suppliers have also been involved in improving profitability. Through more than 300 workshops, cross-functional teams from MCG and its suppliers developed ideas on how to optimise processes, material costs, and quality.
