Daimler to Boost Mercedes’ Profit by 3 Billion Euro image

Daimler plans to increase annual profit by 3 billion euro to be able to reach the 2013 profit margin deal set for Mercedes.

According to Manager Magazin, a German magazine, Daimler hopes to increase the annual profit by implementing the “Fit for Leadership” efficiency program, but that the exact sum is still being calculated as it depends on whether the automaker will take into consideration the existing projects.

The news comes after Daimler recently announced its Mercedes-Benz division will not be able to reach its profit target for this year, due to increasingly tough competition in the Chinese market and decreasing demand in Europe. This year Mercedes lost ground in front of its rivals in China due to internal issue with the local dealership network and a changeover in its B-Class model.

“Clearly Daimler credibility has just fallen yet further, given management’s rather optimistic view on China—and broader Mercedes margins—during second-quarter earnings release [in July],” Max Warburton, an analyst at Sanford C. Bernstein said. “But we believe other German [auto makers] are set to disappoint too.”

If earlier this year Daimler Chief Executive Dieter Zetsche said that Mercdes’ profit is expected to be similar to last year, at the end of September he announced the brand’s full-year earnings will be lower than those in 2011.