Daimler aims for further cost cuts, beyond 2 billion euro original goal image

According to Chief Executive Dieter Zetsche, Daimler, parent of German luxury automaker Mercedes-Benz, aims at bigger cost cuts than an original 2 billion euro in savings by 2014.

Seeing this as a further means to raise profitability at Mercedes, the new cost cutting measures would see Daimler reaching an average annual return on sales of 10 for the Mercedes-Benz Cars unit in the medium term, according to Zetsche.

Daimler’s CEO added the additional costs cuts are now necessary to achieve the targeted profit goal as the rising sales of the A-Class and B-Class compact cars bring lower-margin earnings.

Zetsche also restated Daimler’s intention to seek out a place to build a new plant to build its small cars, which could account by 2020 for 30 % of revenues, from around 15 %.

“We are thinking about an additional factory, which in all likelihood will not be in Germany,” Zetsche said.

For example, the new GLA small crossover, due for European sales from March, is currently being produced in Rastatt, Germany and in Kecskemet, Hungary, but will also start being manufactured this year in China and Daimler also plans Brazilian production by 2016.

Via Reuters