[Auto]Mercedes-Benz presents its new strategy and targets higher structural profitability

[SougarLord]

 

"In recent years we have done a lot of things well: design, product engineering, rejuvenation of the brand, sales growth ... And as a result, we have put Mercedes back on top. But we have not yet exploited all our potential when it comes to turning sales volumes into increased profits. That's why we've reoriented and unveiled our new strategy. We intend to build the world's most desirable cars. It's about leveraging our strengths as a brand to increase economic value and improve the range and positioning of our product portfolio. We will unleash the full potential of our exclusive sub-brands: AMG, Maybach, G and EQ. Our strategy is designed to avoid non-essential activities and focus on Win where it matters: new electric vehicles and proprietary software We will take action on structural costs and focus on profitability. solid and sustained quality, "said Ola Källenius, Chairman of the Board of Directors of Daimler AG and Mercedes-Benz AG in a virtual conference with investors and analysts, entitled" Update of the Mercedes-Benz strategy ", held on October 6 2020.

 

Källenius also said: "With this new strategy we announce our clear commitment to the full electrification of our product range and our determination to ensure that our business is fully carbon neutral, in line with our 'Ambition 2039' goal.

 

Mercedes-Benz's new strategy features a comprehensive program that has been designed to boost the company in technology and economics. It has six pillars:

 

Think and act like a luxury brand

 

Luxury has always been part of the soul of Mercedes-Benz. Moving forward, the brand will take a renewed focus on luxury, making it an integral part of all its products, customer relationships and digital technologies. Mercedes-Benz will reshape its product range, brand communications, and sales network to deliver a truly luxurious experience. An experience that will be electric, powered by software and sustainability.

 

Focus on profitable growth

 

Mercedes-Benz will take steps to improve and recalibrate its market strategy. They will focus on optimizing the balance between volume, price, and channel mix to ensure improved margins for the current and future range. Mercedes-Benz will also focus its resources on product development and its capital on the most profitable parts of the market and the segments in which it competes, in order to ensure greater structural profitability.

 

Expand customer base by growing sub-brands

 

Mercedes-Benz is the most valuable luxury car brand in the world, according to Interbrand. It will remain the guiding star. But Mercedes-Benz also has extraordinary sub-brands: AMG, Maybach, G and EQ. The new strategy will take them to a new level: accelerate their development, with clear and specific plans to unlock their potential and drive substantial EBIT growth.

 

AMG is poised for the next level with high-performance electrification, starting in 2021. Its ties to Formula 1 will also intensify next year, to reflect its identity as Mercedes' high-performance sub-brand. Maybach will seek global opportunities, doubling in size and moving to electricity. Demand for the legendary G is above current capacity. The legend will grow and become electrified. With the EQ brand, Mercedes-Benz will address a new audience with cutting-edge high-tech products, built on specific electrical architectures.

 

Embrace customers and increase recurring revenue

 

Mercedes-Benz is committed to fostering lifelong relationships with its customers. The goal is for customers to love owning a Mercedes-Benz and to be so satisfied with their relationship with the brand that they remain attached to it for a long time, ideally forever. With the new strategy, Mercedes-Benz will seek even greater loyalty, increased number of regular purchases and rapid growth in recurring revenue, both from services and parts and from upgrades and Over-the-Air (OTA) subscription services. The growing number of connected vehicles will offer very significant revenue opportunities in the future, as the Mercedes-Benz fleet will reach 20 million fully connected vehicles by 2025.

 

Leaders in electric mobility and vehicle software

 

Mercedes-Benz aims to take the lead in the field of electric mobility and car software with ambitious product development goals and the accelerated introduction of new technologies. As part of its "Electric First" strategy, Mercedes-Benz has announced the launch of four all-new electric vehicles based on its upcoming large Electric Vehicle Architecture (EVA). The EQS luxury sedan is the first representative of this specific new platform and will hit the market in 2021 with an electric range of more than 700 km (WLTP). The EQE, the EQS-SUV and the EQE-SUV will follow. In addition, AMG, Maybach and G will enter the electric world. Starting in 2025, several more models will be added to the range of electric vehicles from a second totally new electric platform, the so-called Mercedes-Benz Modular Architecture (MMA), designed for compact and mid-size cars.

 

Mercedes-Benz will allocate even more resources and expertise to the development of electric mobility and will invest in new technologies and concepts to increase electric range and efficiency. The next generation of "eMotors" electric drives will be developed within the company itself and will feature sophisticated inverters and high voltage technology. The company is making great strides in battery technology, with its own R&D complemented by close collaboration with key strategic partners CATL, Farasis and Sila Nano. New materials and production processes will increase autonomy, reduce loading time and reduce cost.

 

Mercedes-Benz has also announced an exciting step forward in the development of electric vehicles, with the Vision EQXX technology program. The goal is to build an electric vehicle with spectacular efficiency and range. Mercedes-Benz has entrusted its group of engineers with the task of pushing the limits of electric range and efficiency with a multidisciplinary and multifunctional team based in Stuttgart, supported by specialists from the UK Mercedes-Benz F1 HPP group, who provide its eMotors expertise, plus motorsport-inspired speed of development. Although Vision EQXX is a technology program, it is expected to lead to innovations that will quickly make their way into series production cars.

 

In the area of automotive software, Mercedes-Benz has announced its own MB.OS operating system. This will be developed in-house and its launch is scheduled for 2024. It will allow Mercedes-Benz to centralize control of all vehicle functions and also user interfaces. The evolution of this operating system will allow for faster operating speeds and more frequent updates, and it will be designed around scalable architectures that will regulate future development costs.

 

"At Mercedes-Benz, we strive to take the lead in electric driving and car software. We will do so with a smart electric platform strategy and our own software development plan," said Markus Schäfer, member of the Board of Management of Daimler AG and Mercedes-Benz AG, responsible for Daimler Group Research and Mercedes-Benz Cars COO. "We are going to do it the Mercedes way, creating a true luxury experience to the world of electric and connected cars. We will leverage the development of our own technology and strategic partnerships to deliver superior products. Starting in 2025, we are targeting strong contribution margins between all the new platforms thanks to a great homogeneity and a controlled investment, and the continuous decrease in the cost of battery systems. In parallel with our expansion of the supply of electrified products to reach a share of more than 50 percent of global sales in 2030, our investments to develop combustion engines will decline rapidly and the number of combustion engine variants will be reduced by 70 percent by 2030. "

 

Cost reduction and industrial footprint improvement

Mercedes-Benz will improve its profitability and cash generation and take steps to prepare for the future and accelerate the transition to electric mobility. The events of 2020 have confirmed that the company's breakeven is too high and, with the transformation challenges ahead, further adjustments will be needed. Therefore, Mercedes-Benz will take new and significant steps to reduce costs and improve the industrial footprint in until 2025.

 

Fixed costs will be reduced by more than 20 percent by 2025 in absolute terms compared to the 2019 baseline, through cost reduction, capacity adjustments, and lower staff costs. It is also anticipated that capital expenditures and research and development