Daimler AG plans to cut its annual costs by at least €1 billion ($1.32 billion) to adapt to Europe’s crisis-hit auto market.
An unnamed source familiar with the matter told Bloomberg that the spending reductions are aimed at boosting the automaker’s profitability. Daimler spokesman Florian Martens declined to comment. On September 20, Daimler CEO Dieter Zetsche announced an efficiency program called „Fit for Leadership”, but promised to offer details on savings at a later date.
Zetsche also said that Mercedes-Benz’ passenger cars business in 2012 will not reach last year’s operating profit of 5.2 billion euros, lowering an earlier forecast. The executive declined to reconfirm Mercedes’ goal of reaching a 10 percent margin by 2013. Daimler is reducing spending as the European car market is set to post its steepest decline in 19 years. According to a forecast by industry group ACEA, industrywide deliveries in 2012 will drop 8 percent to 10 percent.
Daimler’s cost reductions are focused on increasing profit by about 3 billion euros, Manager Magazin reported today, citing unidentified company executives. The exact sum is still being calculated, the German magazine added. Daimler has already reached an agreement with its works council on Wednesday to cut production of the S-Class model to one shift from two at its biggest plant in Sindelfingen, Germany, before the next generation goes into production next year.