Daimler CEO announces sweeping cost review as he bows out; new Group structure

Daimler’s outgoing Chief Executive Dieter Zetsche has announced a sweeping cost review as he bid farewell to shareholders following more than a decade at the helm of luxury carmaker Mercedes-Benz, writes Ilona Wissenbach in an article for Reuters. “Everything is under scrutiny: fixed and variable costs, material and personnel costs, investment projects, vertical integration and the product range,” Zetsche told the company’s annual general meeting in Berlin. The shift toward electric cars, a sputtering global economy and rising costs to keep combustion engines clean have hit car industry margins hard, forcing even profitable businesses like Daimler to renew cost-cutting efforts, writes Wissenbach. Pressure to develop electric and autonomous cars has seen research and development expenditure costs at Mercedes-Benz passenger cars rise to 14 billion euros from around 8 billion euros four years ago. Daimler’s shareholders approved a new corporate structure, creating legally independent entities for car and van business and for truck and bus business by way of a spin-off. The aim is to enhance Daimler’s “degree of innovation and agility in order to react quickly to changes” in a new era of mobility. Zetsche is succeeded by Swede Ola Kaellenius, who previously headed the carmaker's research department.

German carmakers have announced plans to substantially ramp up the share of e-cars in their portfolio as stubbornly high transport sector emissions increasingly shift into the focus of climate action advocates. In mid-May, the world’s oldest carmaker Daimler said it aimed to bring the share of e-cars in its sales to 50 percent by 2030 and to achieve a “carbon-neutral passenger car fleet” by 2039. Plug-in hybrids, or all-electric cars, will make up half of its fleet at the end of the next decade, the company said on its so-called “Ambition 2039”. It also announced “CO2-neutral production in Europe as of 2022” as well as an “agreement on concrete CO2 measures with suppliers and joint design of infrastructure”.