Daimler trucks widens global parts sharing to bolster earnings

Bloomberg

Daimler AG’s trucks division, seeking to recover from a profit warning last month, aims to boost future earnings with a plan to cut costs by sharing engines, axles and other components across units in North America, Europe and Asia.
Once truck markets return to “a more normal level,” the unit will reach its target of an average 8 percent return on sales, Wolfgang Bernhard, head of Daimler’s commercial-vehicle business, said at a press conference on Wednesday in Stuttgart, Germany. A key to boosting profit will be developing vehicle parts for use worldwide, he said.
“We’ve initiated the right measures to balance short-term swings and reach our long-term goals,” Bernhard said. “We’re not talking about 10 or 15 years, we want to get these things done by the end of this decade and this will put us in a unique position,”
The world’s largest maker of commercial vehicles is seeking to stabilize earnings and counter mounting competition. Declining demand in the U.S. and contracting markets in Brazil, Russia and Indonesia prompted Daimler last month to forecast “ significantly lower” 2016 profit at the unit. To offset such swings, the German manufacturer, which also makes Mercedes-Benz luxury cars, has embarked on an unprecedented push to share truck parts across more vehicles and markets.

Delivery Target
The division’s Mercedes-Benz trucks brand plans 2,000 job cuts in Brazil, and its North American operations, which include the Freightliner and Western Star nameplates, are laying off a similar number of workers. The business is sticking to a target of selling 700,000 trucks a year by 2020, Bernhard said.