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.
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"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.
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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.
Also Read : Mercedes maps out push to lift profits during electric car shift
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.
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