The German automaker has warned that tougher emissions rules in the EU will hurt its profits over the next two years. Daimler is struggling with falling profits as it looks to make a costly switch to electric vehicles.
German carmaker Daimler said on Thursday it planned to cut jobs at its Mercedes-Benz cars unit to save costs as it looked to boost profits amid an expensive transition to greener vehicles.
The carmaker is targeting savings of more than €1 billion ($1.1 billion) by the end of 2022 with the job cuts. The plan involves eliminating 10% of management positions, as reported by a German daily on November 8. The company is also looking to cut staff costs at both its car and truck divisions.
The iconic German automaker has been struggling with falling profits, hurt by expensive recalls linked to its diesel engines, softening demand amid a global slowdown especially in its key Chinese market, and a costly switch to autonomous, electric vehicles (EVs).
The carmaker's strategy is rather vague and doesn't involve any concrete measures," auto analyst Jürgen Pieper told DW. "However, if you're serious about a sustainable production process, you simply can't continue to make G-Class vehicles anymore, to give you but one example."
Stuttgart-based Daimler also flagged that tougher emissions rules in the European Union would further put pressure on its bottom line in 2020 and 2021. It said it would need to sell more EVs to meet the new emission norms, which call on carmakers to substantially bring down harmful emissions from cars.
Daimler expects Mercedes-Benz car sales to go up by around 3% next year but warns that Chinese retaliatory tariffs on US-made cars and Brexit could trigger major headwinds. Daimler and German rival BMW are the top exporters of US-produced vehicles to China.
"The company's mid-term financial targets are really disappointing. The Mercedes brand is aiming for a mere 6% profit margin in 2022," Pieper said. "Even if you make pre-production outlays part of the equation, it's simply not good enough; and the figure for 2020 is bound to be even lower."
ap/hg (Reuters, AFP, dpa)