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Daimler cuts jobs worldwide in transformation bid

William Payne
November 14, 2019

Daimler is planning to save $1 billion in costs worldwide through job reductions to buffer the high cost of moving away from petrol and diesel cars and trucks. $100 million in savings will come from the van division, and $250 million from the company's trucks and bus division. Daimler says it sees the creation of logistics hubs on motorways as a growth area, and is planning to devote resources to growing in this area.

10% of managers in the company's German operations are expected to lose their jobs, and 1,100 management jobs worldwide will go.

The company blamed the cuts on a continuing fall in profitability as a result of requirements to meet lower CO2 emission targets, as well as the ongoing transformation of the automotive and trucks industry towards greater digitisation and automation.

In a statement, the company said that in the Daimler Trucks & Buses division, investment and cost pressure will continue in the coming years. Investment in new technologies is needed, also in the CO₂ neutrality of the fleet through electric drive and in the automation and connectivity of trucks and buses.

In terms of market share and profitability, the profitability of Mercedes-Benz Trucks in Europe and Latin America – together accounting for 30% of global revenue – is "currently unsatisfactory". Mercedes-Benz Trucks Europe has started to reduce variable costs by €250 million as well as personnel costs by €300 million by the end of 2022. 

The division's sales organisation will also be restructured. In Brazil, the number of platforms will be significantly reduced in order to return to profitability. In Japan, sales and the after-sales organisation will be set up "more efficiently".

Daimler says that the market for heavy trucks, on which Daimler Trucks is increasingly focusing, "offers good global growth and earnings prospects". In the long term, the truck manufacturer sees considerable business potential in highly automated trucks that travel between logistics hubs on highways. On this basis, the division Daimler Trucks & Buses anticipates a return on sales from operating activities of at least 5% in 2020 and at least 7% in 2022.