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

Daimler said on Tuesday it will cut fixed costs, capex and research and development expenditure by more than 20% 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.