Daimler AG vowed to cut costs and boost efficiency to restore profit margins as the two top executives who steered the Mercedes-Benz carmaker for more than a decade leave their successors to tackle unprecedented industry shifts poised to reshape global transportation.
“We cannot and will not be satisfied with the current level of profitability,” chief executive officer Dieter Zetsche said on Wednesday at the German manufacturer’s shareholder meeting in Berlin, which marks the end of his 13-year tenure. “Everything is under scrutiny: fixed and variable costs, material and personnel costs, investment projects, vertical integration and the product range.”
Daimler’s goal remains to return Mercedes-Benz Cars and MercedesBenz Vans to a “profitability corridor” of eight per cent to 10 per cent by 2021, the company said. At the heavy trucks and bus divisions, the goal is to achieve a sustainable return of 8 per cent and to “unlock further potential”.
Zetsche, 66, and Chief Financial Officer Bodo Uebber, 59, turned Daimler from an industrial conglomerate that included holdings in aviation into a company focused on upscale passenger cars and commercial vehicles. Among their key decisions was selling Chrysler to Cerberus Capital Management in 2007 before the financial crisis pushed the United States mass-market manufacturer into bankruptcy.
Following the ill-fated merger with Chrysler, the duo shepherded the painful restructuring of Mercedes-Benz after poor quality dented sales. This included axing thousands of jobs, shaking up design and expanding the brand's compact-car offerings, culminating in winning back the global luxury-car crown from BMW AG in 2016.
Both manufacturer now face the difficult task on how to allocate shrinking profits and find savings to finance the shift toward electric cars and digital services with a payoff that might be years away.
Zetsche will hand the wheel to Ola Kallenius, 49. The Sweish-born executive gave a first glimpse on his strategy last week, pledging to make Daimler greener.-- Bloomberg