Daimler has announced plans to slash €1.4bn in personnel costs, as the German carmaker warned that the shift to electric vehicles will hit profits over the next two years.
“The expenditure needed to achieve the CO2 targets require comprehensive measures to increase efficiency in all areas of our company. This also includes streamlining our processes and structures,” said chief executive Ola Källenius, who took the reins at Daimler in May.
“To remain successful in the future, we must therefore act now and significantly increase our financial strength.”
On Thursday Mr Källenius outlined his plans, which include a cap on investment in property and research and development at Mercedes Cars, ahead of a presentation to investors in London and New York. Daimler has been burning through cash in the last few months, as it grapples with the cost of electrification.
He added that personnel costs at Mercedes-Benz Vans would be reduced by €100m, and by €300 million at Mercedes-Benz Trucks Europe.
Last week, leaders of Daimler’s work council informed German employees that Mr Källenius intends to axe 1,100 managers worldwide, and a tenth of all managers in the carmaker’s home country.
The company said that it expected margins at Mercedes-Benz Cars and Vans of 4 per cent and 6 per cent in 2020 and 2022 respectively.
Shares in Daimler tumbled almost 5 per cent in early trading in Frankfurt.
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