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by Stephan Bauer, Euro am Sonntag
I.Ola Kllenius is now very familiar with the TV studio. The Swede already held his first general meeting as Daimler CEO in front of a virtual backdrop. He also presented the new corporate strategy to international investors in a Corona-adequate manner, including perfectly produced videos with heroic music. It’s nice that it didn’t stop with the high-gloss backdrops. “We have a sack full of work ahead of us,” Kllenius said in the spring when the balance sheet was presented for 2019 and after a 60 percent drop in operating profit. Ultimately, Kllenius, CFO Harald Wilhelm and head of development Markus Schfer delivered the result of this work: the route on which the German premium flagship is to steer towards “structurally higher profitability”.
The handlebars from Daimler, the inventor of the automobile, aim at the core competencies of the brand: premium and, in the future, even more so, luxury. “We want to build the most desirable cars in the world,” says Kllenius, who wants to grow with the rapidly growing number of wealthy people worldwide. According to the IHS, the luxury segment of the global automotive market is expected to grow by an average of 4.7 percent per year in sales by 2030, while the mass market will only grow by 1.2 percent. Kllenius wants to attract its liquid clientele with a star and several sub-brands: the sports car subsidiary AMG, the G-Class off-road vehicle and the super luxury brand Maybach. The goal: a better product mix for higher margins. The route taken by its predecessor Zetsche, who headed for the volume segment with the new A-Class, for example, is thus abandoned.
All brands electric
The Swede also left no doubt that the e-mobile age is now beginning irreversibly at Daimler – the stock market success of the pioneer Tesla is putting a lot of pressure on this. Electric cars should run right through the portfolio to AMG or Maybach, Daimler’s pure electric label EQ should primarily win high-tech customers. By 2025, the Swabians want to put at least ten pure electric cars on the road – only two are still rolling with EQC and EQV, which will be reinforced with the EQS electric sedan in 2021.
The strategy for the electric drivetrain pays tribute to the lower volumes of a premium supplier. In contrast to market leader Tesla, the Swabians do not produce their cells themselves, but develop them with the Chinese specialists Farasis and CATL. Kllenius’ goal is to keep battery costs below 100 euros per kilowatt hour of capacity by 2025. Tesla is aiming for around $ 50 per kilowatt hour by 2023.
A bang in the cost
Daimler’s MB.OS automotive operating system, which controls all systems from battery control and drive, the assistant for autonomous driving to infotainment, should run by 2024. Thanks to high-performance computers from partner Nvidia, it should be intelligent and capable of learning.
It is astonishing that in view of these tasks, the Swabians want to reduce fixed costs as well as investments and development expenditure by 20 percent by 2025. It is not yet clear how many jobs will ultimately be cut. Depending on the source, there is talk of 20,000 to 30,000. In addition to this reduction, the complexity of both model variants and production must decrease. To this end, Daimler is reducing the variants of its internal combustion engines by 70 percent by 2030. The efficiency in production should increase significantly in order to ultimately cope with lower capacities. The aim is also to save one percent net each year in variable costs by 2025.
From now on there is also a range of target margins for different market scenarios. “Our break-even must drop significantly so that we can achieve operating margins of six to eight percent even in rainy years,” says CFO Harald Wilhelm. Kllenius sees a lower limit of around two million vehicles per year for sales. If the barometer rises to sunny, which, according to Wilhelm, means volumes beyond 2.5 million, profitability should be above the ten percent mark. An average of eight to ten percent margin is targeted.
Advance: The last quarterly figures were significantly better, the trend should continue. bet on a success of the strategy.
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Image sources: Daimler AG, Taina Sohlman / Shutterstock.com