The car brand is feeling the transformation in several places: The products should become more sustainable, at the same time Daimler boss Källenius wants to part with employees. Mercedes should continue to stand for luxury.
Dhe automaker Mercedes is to be completely realigned in the next few years according to the plan of the Daimler Board of Management and at the same time to quickly achieve high profit margins. The strategy that Daimler CEO Ola Källenius presented to the investors in a digital event lasting several hours focuses entirely on positioning the brand even more clearly in the luxury segment: “The luxury segment is growing and we are a growing company,” Kallenius clarified.
Size is very important, but it is not about selling 100,000 more cars at the expense of returns, he added with a swipe at the former focus on unit numbers. The luxury strategy is linked with a declaration of war on competitors who have so far been more successful with their electric cars: “We are striving for leadership in the field of electric mobility,” said Daimler Development Board Member Markus Schäfer, who is also responsible for Mercedes production in the Stuttgart-based company .
By 2030, the proportion of electric vehicles in sales could rise to 50 percent, but Mercedes could also make 100 percent possible. At the same time, the number of internal combustion engines is to be reduced by 70 percent. On the new platform for electric luxury sedans and SUVs, the first model to be launched on the market in 2021 will be the electric S-Class (EQS), for which Mercedes has announced a range of more than 700 kilometers. This will be followed by the EQE (E-Class) and the SUV variants of these series.
One billion profit from digital networking
In addition, the sub-brands will also be electrified, announced Källenius – both the G-Class as a “vehicle for adventurers” and the AMG cars as a brand for high-performance drives and, last but not least, Maybach for exceptional luxury. Källenius hopes that “substantial profit growth” will be achieved with the sub-brands in particular. Daimler also sees a new source of income in the digital networking of cars. Mercedes sales director Britta Seeger said that digital services could already generate one billion euros in EBIT (earnings before interest and taxes) in 2025.
The realignment goes hand in hand with significant cost reductions, especially in research and development, as well as investments that peaked last year at 15 billion euros. By 2025, despite the necessary expenses for the transformation, these costs are to fall by 20 percent, primarily through the reduction of the current model variety and greater standardization in the electrical sector as well as through the reduction of capacities.
Personnel costs are also to be reduced significantly. Since the beginning of the year, the Mercedes workforce has already decreased by 3800 to 169,600 employees, reported Daimler CFO Harald Wilhelm. The number of severance agreements has recently increased significantly, to currently 1000 contracts. The bottom line is that an improved cost structure in combination with new sources of revenue should lead to new financial strength for Mercedes, explained the Board of Management – with a return on sales in the mid to high single-digit percentage range by 2025 even under unfavorable conditions or even a double-digit return in a strong market environment.