Daimler has set out a plan to cut long-term costs as it says profitability will be impacted by tougher CO2 reduction rules and the ongoing ‘transformation of the automotive industry’.
By the end of 2022, Daimler’s Mercedes-Benz Cars division plans to save more than EUR1bn in personnel costs. The company said jobs are to be reduced in “both management and the indirect areas”. The company also said it “is in close dialog with the employee representatives in order to make the measures as acceptable as possible”.
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“We are positioning the company for the transformation with a clear strategy for the future. The expenditure needed to achieve the CO2 targets require comprehensive measures to increase efficiency in all areas of our company. This also includes streamlining our processes and structures,” said Ola Källenius, Daimler’s board chairman. “This will have a negative impact on our earnings in 2020 and 2021. To remain successful in the future, we must therefore act now and significantly increase our financial strength.”
The company said its Mercedes-Benz brand is well positioned to “continue as the world’s leading premium brand” but acknowledged that global CO2 regulations require ongoing high investment that will dent the bottom line. The company said an expanded range of plug-in hybrids and all-electric vehicles is leading to cost increases that will have a negative impact on Mercedes-Benz Cars’ return on sales. However, it maintains that a consistent product plan has been put in place to achieve the [average CO2 emission] fleet targets in the EU.
The company says that Mercedes-Benz Cars has “initiated systematic countermeasures to sustainably improve its cost structure and offset the expected margin erosion”. Primarily, material cost reductions, it says, should support this compensation. However, by the end of 2022, Mercedes-Benz Cars plans to save more than EUR1bn in personnel costs.
Mercedes-Benz Vans, Daimler says, is a growth sector, supported by increasing urbanisation and digitisation of the retail business. However, in order to increase Mercedes-Benz Vans’ competitiveness, material costs are to be reduced as well as personnel costs by EUR100m.
