Costs to develop electrification and self-driving technologies is putting pressure on many automakers' bottom lines, including Daimler which on Thursday said it will cut jobs as a result of these pressures.
CEO Ola Kaellenius, speaking at an investor meeting in London, said the jobs cut will primarily be at the Mercedes-Benz cars division. A number wasn't mentioned but earlier reports put it at 1,100, mostly from managerial positions. Many of those could be through voluntary redundancy due to Germany's tough labor laws.
“The expenditure needed to achieve the CO2 targets require comprehensive measures to increase efficiency in all areas of our company,” Kaellenius said. “To remain successful in the future, we must therefore act now and significantly increase our financial strength.”
Daimler seeks cost savings of around $1.1 billion by the end of 2022. Beyond the job cuts, the company will also fix wages and reduce spending in other areas, including investments in property, plant and equipment, and R&D. Daimler will also increase its focus on higher-margin vehicles.
Although the automaker expects sales to grow in the coming years, with 2020's sales forecast to increase 3 percent, Daimler said it will have to sell an increasing number of electric cars, which have significantly lower margins than internal-combustion cars, to meet emissions targets in Europe. Kaellenius said this will have a negative impact on Daimler's earnings in 2020 and 2021, and he also acknowledged the potential for tariffs to further hamper things.