Daimler Truck Deputy Chair Wary of 15% Cost Savings Target

Michael Brecht Urged Caution on Spending Cuts
Mercedes-Benz Daimler truck
A Mercedes-Benz GenH2 hydrogen-powered truck, manufactured by Daimler Truck Holding AG, at the 2022 IAA Transportation show in Hanover, Germany. (Krisztian Bocsi/Bloomberg News)

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Daimler Truck Holding AG is not likely to achieve the 15% reduction in operating costs, investment and research and development expenditures it’s targeting by 2025, its works council chief and deputy chairman says.

The German firm is focusing on efforts to reduce administrative and sales expenditures and is relocating business activities from Germany to lower-cost countries like Romania, but this year will be rougher overall than 2023, Michael Brecht told German news agency DPA.

“I don’t think it’s realistic to achieve this figure,” Brecht said, adding that “the wind will overall be a bit more raw” in 2024.

“Of course we need a decent return on sales, of course we need to work on the company’s resilience,” he said, but “what’s more decisive is whether we are doing the right things now so that we really have a functioning company on the market.”

The world’s biggest commercial vehicle maker is trying to leverage its scale to produce profitability on par with Volvo AB and Volkswagen AG’s Scania brand. Daimler Truck’s push to lift margins in excess of 10% by mid-decade while transitioning to electric big rigs is a challenge, with uptake being stymied by a dearth of charging infrastructure and high vehicle costs.

Daimler Truck has sufficient cash on hand to develop its own technologies, but it needs to do more to differentiate itself from the competition by investing in research and development, Brecht said. The company last year unveiled a heavy-duty electric truck designed to take on Tesla Inc.’s Semi and plans to build a battery factory with partners in the U.S.

In an interview with Bloomberg TV last year, Brecht said any cost cuts the company plans for bolstering returns should not impact investments in new, promising technologies.

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