Daimler Sees Positive Earnings by Year's End, Reliance on Big Glitz

Mercedes-Benz parent company Daimler reported its second-quarter earnings Thursday, revealing a net loss of nearly 2 billion euros and a revenue drop of more than 12 billion euros. Thanks, coronavirus.

While the red ink spilling from Daimler’s balance sheet is cause for concern, the automaker put on a happy face, regarding this year’s financial blows as mere setbacks. The company expects pre-tax earnings to return to the positive side of the scale by the end of the year. To help grow future profits, the Mercedes-Benz brand plans to turn its focus to the toniest of products.

Calling the quarter just ended “challenging,” Daimler boss Ola Källenius stated, “We are now seeing the first signs of a sales recovery – especially at Mercedes-Benz passenger cars, where we are experiencing strong demand for our top end models and our electrified vehicles.”

Via Reuters, Källenius said the brand’s high-margin models will take on an increased importance as the automaker moves forward.

“I see the strongest growth in the upper end of the segments where we are active.”

Models like the newly revamped Mercedes-Benz GLS will help, along with the ultra-lux, Maybach-badged variant it recently spawned. The same goes for the S-Class and its Maybach cousin.

While the automaker’s German home base and global product presence meant it suffered a more prolonged sales slump than, say, American automakers, the company feels it’ll soon be out of the woods. That’s assuming there’s not a steep second wave of COVID-19 infections. Ongoing reductions in its workforce will help Daimler offset financial damage in such an instance by reducing fixed costs, but the 10,000 jobs expected to meet the axe now look to be too few.

“Daimler assumes that the pandemic-related decrease in unit sales will not be offset in the remainder of this year,” the automaker said. “Therefore, efficiency and capacity measures are to be intensified.”

The initial plan was for 10,000 cuts, but company sources tell Bloomberg that 20,000 is more likely. Germany’s Manager Magazin, however, puts the number even higher — 30,000.

[Images: Daimler]