Daimler has today presented at the Capital markets day a new sustainable business strategy. With a consistent commitment to CO2-neutral mobility, the company sets the course for a successful future.
“With a clear strategy for the future we set up the company for the Transformation. The costs of achieving the CO2 targets require comprehensive measures to increase efficiency in all areas of our company. This also includes the streamlining of our processes and structures,“ said Ola Källenius, Chairman of the Board of Daimler AG and the Mercedes-Benz AG. “This will weigh on our results in the years 2020 and 2021. In order to be successful in the future, we must act now and our financial strength significantly increased.“
The company believes that the premium market for Cars grows in the future in a sustainable and faster rate than the volume market. Mercedes-Benz is well positioned to remain the world’s leading premium brand. The global regulatory CO2 requirements continue to require high levels of investment. The growing range of Plug-In hybrids and pure electric vehicles leads to cost increases, which will impact the return on sales Mercedes-Benz Cars. To achieve the CO2 targets in the European Union a consistent product plan was on the way.
Mercedes-Benz Cars has initiated systematic efforts to improve the cost structure in the long term and to compensate for the expected erosion of Margins. Primarily material cost reductions to support this compensation. By the end of 2022 Mercedes wants to save-Benz Cars, more than a billion € in personnel costs. This should be reduced both in Management and in the indirect areas. With the employee representatives, the company is in close contact, in order to make the measures as compatible as possible. To the strengthening of the Free Cash Flow investments in property, plant and equipment, as well as in research & development will be capped at the level of the year 2019, and reduced in the medium term. Strategically trying to position Mercedes-Benz Cars as a pioneer for sustainable modern luxury and the brand continue to develop. The focus is in particular on the development of higher-margin vehicles in the respective Segment.
Mercedes-Benz Vans is a growing field, supported by increasing urbanization, and digitization of the trading business. In order to increase the competitiveness of Mercedes-Benz Vans, to reduce the material cost and the personnel cost will be reduced to € 100 million.
On this Basis, the business unit of Mercedes-Benz Cars & Vans expects a return on sales in the ongoing business of at least 4% in the year 2020 (potential duties) and of at least 6% in 2022 (from possible customs duties).
Daimler Trucks & Buses
In the short to medium term, Daimler Trucks expects a decline in demand in the core markets in Europe and the USA. This normalization has already begun and is expected to continue until 2021. Daimler Buses expects an increase in demand. In the field of business for Daimler Trucks & Buses, the investment and costs pause printing in the coming years. Necessary investments in new technologies, among other things, in a CO2-neutral fleet by electric drives, as well as in the automation and networking of Trucks and buses.
In terms of market share and profitability of the business units of Daimler Buses, and Daimler Trucks North America, which together account for 55% of sales belong to the best in the business. Not satisfactory was the profitability of Mercedes-Benz Trucks in Europe and in Latin America is currently, however, this 30% of global sales are accounted for. Mercedes-Benz Trucks Europe has therefore begun to reduce the variable costs by € 250 million and the reduction of staff costs by the end of 2022 to 300 million€. In addition, the distribution should be restructured. In Brazil, the number of vehicle platforms will be reduced substantially, in order to return to profitability. In Japan, the sales and the After-Sales Organisation to be set up more efficiently.
Global growth and profit prospects, especially the market for heavy-duty Trucks, the Daimler Trucks increasingly concentrated. In the long term, the Truck manufacturer with considerable business potential through highly automated Trucks that operate on Highways between logistics nodes. On this Basis, the field of business for Daimler Trucks & Buses expects a return on sales in the ongoing business of at least 5% in 2020 and by at least 7% in the year 2022.
Daimler Mobility will continue to support vehicle sales. In addition, the fleet business is to be expanded further. Through investments in urban mobility services will be offered to customers with flexible and attractive solutions for future mobility and growth opportunities for the future developed. The business field covers all customer needs, from short-term vehicle use through multi-year financing options. Regulatory higher capital requirements are a burden in the future, the return on equity. The business field of Daimler Mobility counteracts this effect with efficiency measures, and digitization. The goal is to grow in all three core activities are profitable, to increase the company’s value and to pay a dividend to the parent company. On this Basis, the business field of Daimler Mobility expects a return on equity of more than 12% in 2020 and 14% by the year 2022.
Focus on Free Cash Flow and prioritization of expenditure
A solid financial position, wants Daimler to increase the level of Free Cash Flow. Is to achieve a stable net liquidity of more than € 10 billion. To do this, the group will prioritize in all areas of investment and expenditure, to a more stringent allocation of capital to undertake.
Source: Daimler AG