Daimler to cut fixed costs by more than 20per cent in luxury drive

Daimler to cut fixed costs by more than 20per cent in luxury drive

Daimler on Tuesday said it will cut fixed costs, capex and research and development expenditure by more than 20per cent by 2025 compared with 2019 levels as part of a strategy overhaul to reposition Mercedes-Benz as a luxury brand.

The Daimler logo is seen before the Daimler annual shareholder meeting in Berlin
FILE PHOTO: The Daimler logo is seen before the Daimler annual shareholder meeting in Berlin, Germany, April 5, 2018. REUTERS/Hannibal Hanschke

FRANKFURT: Daimler said on Tuesday it will cut fixed costs, capex and research and development expenditure by more than 20per cent by 2025 compared with 2019 levels as part of a strategy overhaul to reposition Mercedes-Benz more upmarket as a luxury brand.

The company’s ambition is to achieve a double-digit return on sales margin by doubling sales of Maybach branded cars, and ramping up sales of AMG and G-Wagon derivatives of the Mercedes brand, Daimler said.

"We will pursue higher portfolio profitability, we will steer by contribution margin, we will move (the) existing portfolio margin up and move capital to luxury and high-end products," Chief Financial Officer Harald Wilhem said in a virtual presentation of the company's strategy.

By 2025, Mercedes-Benz AG aims for a return on sales within a mid to high single-digit range, even under unfavourable market conditions, the carmaker said.

Daimler has already cut costs as the coronavirus pandemic led to a slump in sales, pushing the German company to operating losses in the first and second quarters.

To counter losses, Mercedes-Benz stopped building sedans in the United States to focus on more profitable SUVs, combined its fuel cell development with Volvo Trucks, and halted an automated development alliance with BMW .

(Reporting by Edward Taylor; Editing by Riham Alkousaa. Editing by Jane Merriman and Susan Fenton)

Source: Reuters

Bookmark