Emissions rules force Daimler to cut jobs to save €1bn
The move to electric cars and other setbacks pushed Daimler into a net loss of €1.2bn in the second quarter, its first quarterly loss in 10 years
Frankfurt am Main — Daimler said on Thursday it plans to cut jobs to save more than €1bn (R16m) by the end of 2022, as the German luxury carmaker grapples with an expensive switch to greener vehicles.
The Mercedes-Benz maker has also been hit by expensive recalls, a slowing global market, and an €870m fine for having sold vehicles that did not conform with legal emissions limits.
“By the end of 2022, Mercedes-Benz Cars plans to save more than €1bn in personnel costs. To this end, jobs are to be reduced,” the company said in a statement.
Daimler, which employs about 304,000 people worldwide, did not specify how many jobs would be slashed overall but said 10% of management positions would be affected.
The Süddeutsche Zeitung newspaper reported last week, citing an e-mail sent to staff by the group’s works council, that Daimler was to cut 1,100 management jobs. Daimler said it is being forced to reduce costs because “the expanded range of plug-in hybrids and all-electric vehicles is leading to cost increases that will have a negative impact on Mercedes-Benz Cars’ return on sales”.
The company said it is faced with “ongoing high investment” to conform to global emissions regulation. Like its rivals, the Stuttgart-based firm is spending billions in the shift towards the electric, autonomous vehicles of the future.
The German car industry as a whole is also confronting weaker-than-expected growth, weighed down by US-China trade conflicts and Brexit uncertainty. The setbacks pushed Daimler into a net loss of €1.2bn in the second quarter, its first three-month loss in 10 years.
It returned to quarterly profits in July-September and said it is expecting 2019 revenues to be “slightly above” 2018’s, while operating profit will be “significantly below” the €11.1bn in 2018.
In its statement on Thursday, the company said it is capping its investment in research and development and in property, plant and equipment at the 2019 level and this will be reduced “in the medium term”.
The company said it will also reduce variable costs by €250m and personnel costs by €300m by the end of 2022 at Mercedes-Benz Trucks Europe, another division.
The company’s stock was down 3.01% at €51.93 at about 11.30am GMT on the Frankfurt stock exchange, where the DAX 30 index was down 0.33%.