Mercedes-Benz to slash models

Mercedes-Benz will cut 20 per cent from its operating costs and slash several underperforming models by 2025, its parent company Daimler announced overnight.

Launching its new strategy, 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 he did not announce which models would be slashed from the Mercedes-Benz line-up, it is presumed the weaker-selling, lower-end models would be at risk in a move upmarket.

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 stand-alone models from Mercedes-AMG and Mercedes-Maybach, while it will spin the off-roading G-Class into its own sub-brand.

“We have not yet lived up to our full potential in terms of turning volume success into profit growth,” Källenius admitted today.

“That’s why we have refocused and are launching our new strategy. We intend to build the world’s most desirable cars.

“It’s about leveraging our strengths as a luxury brand to grow economic value and enhancing the mix and positioning of our product portfolio.

“We will unlock the full potential of our unique sub-brands – AMG, Maybach, G and EQ. Our strategy is designed to avoid non-core activities to focus on winning where it matters: dedicated electric vehicles and proprietary car software.”

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.

In a turnaround document, which Daimler pointedly refused to call a turnaround document, Källenius promised to push EVs to half of Mercedes-Benz’s sales into EVs by 2030, while slashing combustion engine sales by 70 per cent.

He promised to start the ball rolling with four new EV models off Daimler’s large Electric Vehicle Architecture (EVA), starting from next year.

The new EQS will be the first off the dedicated EV architecture, delivering a WLTP (European) range of more than 700km. 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.

Källenius was forced to move quickly from the poisoned chalice handed to him by former Chairman Dr Dieter Zetsche, who left a raft of investigations into diesel cheating, pricing collusion and buried costs behind him.

He 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 per cent of Daimler’s stock.

Despite the cuts to development spending, R&D board member Markus Schäfer insisted Mercedes-Benz was striving for “nothing less than taking the lead in electric drive and car software.

“We will do this with an intelligent electric platform strategy and a proprietary software development approach.

“And from 2025 on, we are targeting strong contribution margins for all new architectures thanks to high commonality and controlled investment, and ongoing falls in the cost of battery systems.

“While we will expand the electrified portfolio towards a share of more than 50 per cent of global sales by 2030, our investments in combustion engine development will decline quickly and the number of combustion engine variants will fall by 70 per cent by 2030.”

Källenius also insisted the brand was committed to becoming carbon neutral by 2039, which seems an odd figure, especially as the higher volume Volkswagen Group has a target almost a decade earlier than that.