Daimler's Mercedes-Benz has announced a new strategic course that will pursue profitable growth in the luxury segment and target leadership in electric drive and car software.
"In recent years we have done many things right: design, product engineering, brand rejuvenation, sales growth. As a result, we have put Mercedes back on top again. But we have not yet lived up to our full potential in terms of turning volume success into profit growth," said chairman Ola Kaellenius at a virtual investor and analyst conference titled "Mercedes-Benz Strategy Update" today (6 October).
Kaellenius also said "with this new strategy we are announcing our clear commitment to the full electrification of our product portfolio and our determination to ensure the business is fully carbon-neutral, in line with our Ambition 2039 target."
The new Mercedes-Benz strategy has six pillars:
- Think and act like a luxury brand
- Focus on profitable growth
- Expand customer base by growing sub-brands
- Embrace customers and grow recurrent revenues
- Lead in electric drive and car software
- Lower cost base and improve industrial footprint
Mercedes-Benz is aiming to take the lead in electric drive and car software with ambitious product development targets and the accelerated introduction of new technology.
It has announced four new electric vehicles based on its upcoming large-car Electric Vehicle Architecture (EVA). The EQS luxury sedan is the first representative of this new dedicated architecture and will reach the market in 2021 with an electric range of more than 700 km (WLTP). It will be followed by the EQE, the EQS-SUV and the EQE-SUV. In addition, AMG, Maybach and G will go electric. From 2025, multiple further models will be added to the electric vehicles portfolio on the second all-new dedicated electric platform, the Mercedes-Benz Modular Architecture (MMA) designed for compact and medium-sized cars.
Mercedes-Benz will shift even more of its product development resources and expertise to electric drive, and will invest in new technologies and concepts to accelerate electric range and efficiency.
Mercedes-Benz also announced the Vision EQXX technology programme. The aim is to build an electric vehicle with spectacular efficiency and range. It has tasked its engineering group with pushing the boundaries of electric range and efficiency with a cross-functional, multi-disciplinary team based in Stuttgart, supported by specialists from the F1 HPP group in the UK, who bring expertise in eMotors plus motorsport-inspired development speed. While Vision EQXX is a technology programme, it is expected to result in innovations that will quickly make their way into series production cars.
In the area of car software, Mercedes-Benz has announced its own proprietary MB.OS operating system. This will be developed in-house and is scheduled for launch in 2024. It will allow the automaker to centralise the control of all the vehicles' domains and also its consumer interfaces. Proprietary software development will allow greater speed and more frequent updates, and will be designed around scalable architectures that will control future development costs.
2020's events have confirmed that the company's break-even point is too high and, with the transformational challenges ahead, further actions will be needed. Mercedes-Benz will therefore take significant new steps to reduce the cost base and improve the industrial footprint in the period to 2025.
Fixed costs will be cut by more than 20% by 2025 in absolute terms compared to the 2019 baseline, via reduced spending, capacity adjustments and lower personnel costs. Capex and R&D expenditure are also 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, including increased and prolonged savings targets for material costs. This target excludes the effects of a higher xEV mix.
By 2025, Mercedes-Benz AG is aiming for a return on sales (RoS) level within a mid to high single-digit range, even under unfavourable market conditions. The company's ambition is to achieve a double-digit margin in a strong market environment.
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October 06, 2020 at 07:04PM
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