Daimler CEO: 'Streamlining the Portfolio' Necessary for Mercedes-Benz

Matt Posky
by Matt Posky
daimler ceo 8216 streamlining the portfolio necessary for mercedes benz

Still in the midst of a $1.4-billion restructuring plan that aims to cut 10 percent of its workforce, Mercedes-Benz is reconsidering what its product lineup should look like moving ahead. While most of the doomed models will be chosen due to lackluster demand (e.g. X-Class pickup) plenty will be nixed as a result of tightening emission laws. Mercedes parent Daimler issued two profit warnings in 2019 after the luxury brand was fined $960 million in an emissions-cheating settlement. Like many automakers, it was also hemorrhaging cash through its investments in electrification.

An apt analogy for the automotive industry’s stampede toward EVs would be lemmings hurling themselves off a seaside cliff — but not because of the popular misconception that the critters are intentionally committing mass suicide. When lemmings collectively off themselves, it’s the result of migratory behavior gone awry. They simply bunch up and move in a singular direction, largely unaware of the consequences.

However, automakers have to contend with social pressures the little rodents are not subjected to. Environmental regulations in places like Europe and China have effectively forced the hand of many automakers hoping to sell their wares in any meaningful volumes without incurring massive fines. This leaves automakers like Daimler in a bit of predicament, as they lose money on costly development projects that they’ve effectively been forced into. It’ll definitely influence which models/trims Mercedes-Benz places beneath the axe.

Daimler board member Markus Schaefer addressed the issue on Tuesday, telling reporters that cost-cutting would likely encourage the company to reduce the number of variants in Mercedes’ lineup, while platforms and powertain options were further consolidated.

“We will review our current lineup and the idea is streamlining the portfolio,” he said.

According to Reuters, a number of the products slated for elimination would be the result of those tightening emission rules, making note of the Euro 7 exhaust standards. “The question is how many engines you take through the gauge, through Euro 7,” Schaefer explained. “Of course the four-cylinder has more chance to make it than the V-12 to pass the gate.”

From Reuters:

Separately Daimler CEO [Ola Källenius] said the automaker has “no issues” securing electric vehicle battery cells, and is ramping up battery production to meet high demand for plug-in models.

“There is such a high demand for plug-ins, we are ramping up battery production as we speak,” [Källenius] said on the conference call.

Daimler plans to add electric vehicle capacity this year and next year.

[Källenius] said demand for plug-in hybrid models is driven in part by German companies guiding employees who get company cars as a benefit to choose electrified models.

Europe also has government incentives in place to encourage plug-in purchases, with Germany offering sizable tax breaks for buying electric — something Källenius said helped raise demand immensely. European passenger vehicle registrations rose 1.2 percent last year (moving roughly 180,000 more cars than in 2018). About 75,000 of the total sales were EVs, representing a 121-percent increase over the previous annum and providing a silver lining for the industry.

Still, it’s hardly a bed of roses. It’s long been rumored that German manufacturers are having serious problems with their battery suppliers, with Mercedes said to be butting heads with LG Chem. Daimler denies that the situation resulted in lowered production targets for the EQC electric crossover. However, LG Chem was also believed to at the center of Audi’s delay on the E-Tron and a production stall of Jaguar’s I-Pace. Regardless of what is causing the battery supply issue, the Germans are now seeking to lock down the raw materials necessary for battery production for themselves; meanwhile, no one is discussing scaling back EV development programs.

They’re in it to win it … or lose it, if the market dictates that outcome.

[Image: Franz12/Shutterstock]

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  • Tele Vision Tele Vision on Mar 04, 2020

    "[Källenius] said demand for plug-in hybrid models is driven in part by German companies guiding employees who get company cars as a benefit to choose electrified models." I asked my company, "Were I to buy an electric car, can I charge it all day at work?" The answer was 'Don't Ask/Don't Tell'. I'd need a Rivian for where I live and work, though.

  • Golden2husky Golden2husky on Mar 05, 2020

    Whatever the reason, Mercedes needs to cull through their lineup...who can even keep all those models straight anymore? And do you really need an AMG of nearly everything?

  • Dave M. Although the effective takeover by Daimler is pooped upon, this is one they got right. I wasn't a fan of the LHs, mostly due to reported mechanical, NVH and build quality issues, but I though Chrysler hit it out of the park with the LXs. The other hyped release that year was the Ford Five Hundred, which, while a well-built car with superior interior space, couldn't hold a candle to the 300.
  • Art Vandelay I always liked those last FWD 300's. Been ages since I've seen one on the road though. Lots of time in the RWD ones as rentals. No complaints whatsoever.
  • Cardave5150 I've had 2 different 300's - an '08 300SRT and an '18 300C. Loved them both a LOT, although, by the time I had the second one, I wasn't altogether thrilled with the image of 300's out on the street, as projected by the 3rd or 4th buyers of the cars.I always thought that the car looked a little stubby behind the rear wheels - something that an extra 3-4" in the trunk area would have greatly helped.When the 300 was first launched, there were invitation-only meet-and-greets at the dealerships, reminding me of the old days when new model-year launches were HUGE. At my local dealer, they were all in formalwear (tuxes and elegant dresses) with a nice spread of food. They gave out crystal medallions of the 300 in a sweet little velvet box (I've got mine around the house somewhere). I talked to a sales guy for about 5 minutes before I asked if we could take one of the cars out (a 300C with the 5.7 Hemi). He acted like he'd been waiting all evening for someone to ask that - we jumped in the car and went out - that thing, for the time, seemed to fly.Corey - when it comes time for it, don't forget to mention the slightly-stretched wheelbase 300 (I think it was the 300L??). I've never found one for sale (not that I've looked THAT hard), as they only built them for a couple of years.
  • Jkross22 "I’m doing more for the planet by continuing to drive my vehicle than buying a new one for strictly frivolous reasons."It's not possible to repeat this too much.
  • Jeff S Got to give credit to Chrysler for putting the 300 as a rear wheel drive back on the market. This will be a future classic.