Daimler wants to offset carbon reduction strategy with massive cost cuts image

Daimler, the parent company of the Mercedes-Benz and smart brands, among others, has envisioned a strategy to offset the high investments needed to lower the average carbon dioxide emissions.

According to chief financial officer Bodo Uebber, the automaker will rely on material cost savings for a rather large period – at least a few years. For all large carmaker the cost of introducing the necessary technology to lower the consumption and emissions is a burden, especially since the latest consumer trend has returned to buying large, inefficient models because of the sliding gasoline prices around the world. “Already in 2014, we could offset the burdens in variable cost for all these CO2-related measures with material cost efficiencies,” commented Uebber. “I think it will be the same in ’15 and ’16 and ’17.” The comments fall in line with Daimler CEO Dieter Zetsche’s plan to see the company’s new Next Stage program cutting the costs at Mercedes-Benz enough to achieve a 10 percent margin target.

One of the crucial aspects of the plan is to offset structural costs surging at least in part from the combined 11.2 billion euros invested in new factories and equipment that have been forecasted for 2015 and 2016. One of the key sources of cost reduction would be the increase in component sharing across the nameplates, allowing Daimler to tap increased volumes from fewer parts makers. “You have higher volume because you now share components between the C and E and you are talking with the supplier about the whole volume,” added Ueber.

Via Automotive News Europe