Cost cuts and model culls for Mercedes in new strategy plan
A- and B-Class face potential axe as Mercedes adopts a renewed focus on luxury
Mercedes-Benz will cut 20% from its operating costs and slash several underperforming models by 2025, it announced this week.
Launching the brand’s new strategy on Tuesday, Daimler board chairman Ola Källenius insisted he was moving Mercedes-Benz upmarket from a premium brand fighting with BMW and Audi to a luxury brand competing with Bentley and Rolls-Royce.
While not announcing which models would be slashed from the Mercedes-Benz line-up, the A-Class and B-Class could be in the firing line despite their market success.
Global sales of the brand’s compact cars — comprising the A- and B-Class, CLA, CLA Shooting Brake, GLA and GLB — grew by 9.5 % last year to more than 667,000 units but this is not where the main thrust should go in future, Källenius said.
“Maybe we went too far to cover each and every space into each and every segment. We should not become a competitor of the volume makers."
Daimler’s R&D board member Marcus Schäfer admitted manual transmissions were on the chopping block, along with “substantial reduction in platforms” and a “very dramatic reduction in combustion engines”.
Källenius also announced a raft of new electric vehicles from Mercedes-Benz, including standalone models from Mercedes-AMG and Mercedes-Maybach, while it will spin the off-roading G-Class in to its own subbrand.
“We have not yet lived up to our full potential in terms of turning volume success into profit growth,” Källenius admitted.
“That’s why we have refocused and are launching our new strategy. We intend to build the world’s most desirable cars.
The cost cuts, though, are likely to slash even more jobs from the company, which cut 10,000 jobs from its 300,000-strong workforce last November and another 10,000 in June this year.
Källenius promised to push EVs to half of Mercedes-Benz’s sales by 2030, while slashing combustion engine sales by 70%.
He promised to start the ball rolling next year with four new EV models off Daimler’s large Electric Vehicle Architecture (EVA), starting with the new EQS: the all-electric equivalent to the S-class. It will be followed by the EQE sedan and the EQE SUV.
There will be a secondary, EV-first push for the compact- and medium-segment Mercedes-Benz Modular Architecture (MMA) platform, but not until 2025. That will put Mercedes-Benz squarely at the back of the premium field, with Volkswagen, BMW, Audi and Tesla all rolling out heavyweight efforts in the segments before 2022.
Kallenius stopped building sedans in the US this year, trading their production capacity for high-selling, high-profit SUVS, and he merged Daimler’s fuel-cell development with Volvo’s. Volvo is owned by Geely, whose founder Li Shufu owns 9.7% of Daimler’s stock.
— Additional reporting by Denis Droppa
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