Mercedes-Benz Targets Higher Profitability

Mercedes-Benz said it will improve its profitability and cash generation and take actions to prepare for the future and to accelerate the transition to electric drive. It will take significant new steps to reduce the cost base and improve the industrial footprint in the period to 2025.

At a virtual investor and analyst conference, the company said it will cut fixed costs by more than 20% by 2025 in absolute terms compared to the 2019, through reduced spending, capacity adjustments and lower personnel costs.

Capex and R&D expenditure are set to decrease by more than 20% by 2025 compared to 2019. Variable costs will be reduced by 1% net per annum compared to the level of 2019 during the period until 2025.

By 2025, Mercedes-Benz AG aims for a return on sales (RoS) level within a mid to high single-digit range, even under unfavorable market conditions. The company's ambition is to achieve a double-digit margin in a strong market environment.

Mercedes-Benz noted that it will introduce the all-electric architecture in 2021. At the same time, the company will continue to electrify the most successful platforms.

As part of its "Ambition 2039" initiative, Mercedes-Benz said it is working on offering a CO2-neutral new car fleet less than 20 years from now. The company wants electrically powered cars including all-electric and plug-in hybrid vehicles to account for more than half of its sales already by 2030.

Meanwhile, Global passenger car sales of Mercedes-Benz for the third-quarter increased 3.9% year-over-year to 613,770 units, due to the positive development in China and rising customer demand in many other markets.

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