Daimler bets on Mercedes-Benz to achieve significantly higher revenue this year

Article by Andrew Christian, on February 11, 2015

Daimler plans to introduce a new efficiency program at its Mercedes-Benz Cars division to slow down the acceleration of its cost base as it bids to post record vehicle sales, revenue and profits for this year. Daimler has tried but failed to match the higher margins at BMW and Audi. It also has more employees at Mercedes although its luxury sales are lower than BMW and Audi.

Daimler chief executive Dieter Zetsche remarked that the measures are part of its new "Next Stage" program aimed at helping Mercedes achieve a 10-percent margin target in the midterm as well as offset the structural cost increase coming partly from EUR11.2 billion in plant and equipment investment allocated for 2015 and 2016.

He said the planned growth will be accompanied by increases in fixed costs and net assets, but the planned structural changes will limit the hikes. “We want to sustainably improve the structural competitiveness of the company,” he said.

The program is expected to be run until 2020, when Mercedes aims to exceed BMW and Audi as the largest and most profitable premium carmaker in the world. He said they plan to reach a level of profitability “unprecedented” at Mercedes.

In 2014, Mercedes hikes the proportion earnings before interest and tax to sales to 8 percent, from 6.2 percent in 2013. However, BMW and Audi had higher margins at 9.4 percent and 10.1 percent, respectively.

Daimler has been dismissing claims of a bloated workforce by saying that it needs more workers to build components that rivals outsource.

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