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Bloomberg
Daimler AG’s truck division plans to make additional cost cuts to counter weakening global demand and the financial burden of investments in new technologies like electric and self-driving vehicles.
“We want to and will permanently cut our costs. This is why we intensified our efficiency measures,†Daimler truck chief Martin Daum said on Tuesday at a press conference in Stuttgart, Germany. The division targets around 550 million euros ($596 million) in savings in Europe by end-2022.
The world’s largest maker of commercial vehicles is set to spend 1.7 billion euros this year and next in future technologies. The outlay includes Daimler’s bus operations.
The division’s Ebit fell 11% to 2.46 billion euros last year as sales declined 6% to 488,500 vehicles, mainly due to waning demand in Europe and Asia.
The operating profit margin shrunk to 6.1% from 7.2% in the previous year. Daum is bracing for another contraction in profitability in 2020 to 5%, excluding potential “material adjustments†related to legal proceedings or restructuring.
Volkswagen AG stepped up its challenge in the critical North American market with a takeover offer for Navistar Inc. Daimler generates a large chunk of profits at its Freightliner division in the U.S.
Alongside longstanding and more profitable rivals like Volvo AB and VW’s Traton SE, the global industry leader also faces potential competition from Tesla Inc. and Nikola Motor Co. LLC who plan to conquer the electric-truck market.
Daimler shares fell 1.7% to 43.01 euros, valuing the company at about 46 billion euros — less than half of Tesla’s market capitalization.