Daimler to cut personnel cost by €1.4bn to meet CO2 targets
German manufacturer to lay off 10 per cent of managers
, which makes Mercedes Benz cars, has announced plans to cut personnel cost by €1.4bn (£1.2bn, $1.1bn) in order to its meet strict EU CO2 targets.
The German car manufacturer predicts the increased production of electric cars will have a “negative impact” on profits over the next two years.
The group expects Mercedes-Benz cars and vans margins to drop to four per cent in 2020 and rise to just 6 per cent by 2022.
To offset the losses, Daimler has initiated countermeasures, which include saving €1.4bn in personnel costs. Last week the company outlined plans to cut 1,100 leadership positions, which is around 10 per cent of its management.
The company has also capped its investment in property, plant and equipment and research and development.
Chief executive Ola Källenius said in order to remain successful in the future, the company must “act now and significantly increase our financial strength”.
“We are positioning the company for the transformation with a clear strategy for the future,” said Källenius, who took over as head of the company in May.
“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.”
Daimler is under pressure to cut emissions across its fleet, in order to meet strict EU rules that come in next year. If it fails to do so, it could face billions of euros in fines.
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The company received a €870m fine in September for wrongly certifying some of its diesel vehicles.