German automaker Daimler plans to save €1.4bn (£1.2bn) in staff costs and slash 10 per cent of management jobs worldwide as it warned that the shift to electric vehicles would dent its profits over the next two years.
The maker of Mercedes-Benz cars has been struggling with falling profits, hurt by recalls linked to its diesel engines, as well as softening demand due to the global slowdown and a costly switch to electric vehicles.
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Car makers are facing tough times in the transition from fossil fuel-based engines to less polluting electric vehicles, which are costlier to develop.
“The expenditure needed to achieve the CO2 targets requires comprehensive measures to increase efficiency in all areas of our company. This also includes streamlining our processes and structures,” Ola Källenius, Daimler’s chief executive, said in a statement.
Daimler said it needed to sell more electric vehicles to meet tougher EU rules, which will force carmakers to cut carbon dioxide emissions from cars by 37.5 per cent by 2030 compared with 2021 levels.
Mercedes-Benz expects car sales to grow by around 3 per cent in 2020, but potential trade tariffs and Brexit could depress the return on sales by up to per cent. The previous forecast had targeted growth of between 3 and 5 per cent next year.
Daimler shares were down 3.2 per cent at €51,83 in early afternoon trade.
In addition to tougher environmental rules, the auto industry is facing a slowdown in its key markets, especially China.
Ford Motor cut its full-year forecast in October, while Volkswagen last week warned the next two years will be tough.
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