Daimler CEO vows cost cuts, drive to lift profit

Bloomberg

Departing Daimler AG Chief Executive Officer Dieter Zetsche promised cost cuts and an efficiency drive to restore profit margins as the man who steered the Mercedes-Benz carmaker for more than a decade leaves his successor to tackle unprecedented industry upheaval.
“We cannot and will not be satisfied with the current level of profitability,” Zetsche said on Wednesday at the German manufacturer’s shareholder meeting in Berlin, which marks the end of his 13-year tenure. “Everything is under scrutiny: fixed and variable costs, material and personnel costs, investment projects, vertical integration and the product range.”
Daimler’s target remains to return Mercedes-Benz Cars and Mercedes-Benz Vans to a “profitability corridor” of 8 percent to 10 percent by 2021, the Stuttgart-based manufacturer said. At the heavy trucks and bus divisions, the goal is to achieve a sustainable return of 8 percent and to “unlock further potential.” The shares fell as much as 0.7 percent in Frankfurt and were down
0.2 percent.
The walrus-mustached Zetsche, 66, and Chief Financial Officer Bodo Uebber, 59, who is also leaving, turned Daimler from an industrial conglomerate that included holdings in aviation into a company focused on upscale passenger cars and commercial vehicles. Among their key decisions was selling Chrysler to Cerberus Capital Management in 2007 before the financial crisis pushed the US mass-market manufacturer into bankruptcy.
Following the ill-fated merger with Chrysler, the duo shepherded the painful restructuring of Mercedes-Benz after quality woes dented sales. This included axing thousands of jobs, shaking up design and expanding the brand’s compact-car offerings, culminating in winning back the global luxury-car crown from BMW AG in 2016. Both manufacturers now face the difficult task of how to allocate shrinking profits and find savings to finance the shift toward electric cars and digital services with a payoff that might be years away.