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How Daimler got out of the crisis so quickly

2021-07-15T15:15:58.268Z


Whether Volkswagen or Daimler - the German carmakers are leaving the Corona crisis behind them and are making healthy profits again, often higher than expected by experts. How is that actually happening?


Whether Volkswagen or Daimler - the German carmakers are leaving the Corona crisis behind them and are making healthy profits again, often higher than expected by experts.

How is that actually happening?

Stuttgart - Daimler exceeded analysts' expectations in the second quarter.

The Stuttgart-based car and truck manufacturer Daimler seemed to be in serious trouble in July 2020 in view of a quarterly loss in the billions and exploding costs.

Sometimes the view of the world changes dramatically in just a year.

Between April and the end of June alone, the group reported surprisingly high earnings before interest and taxes (EBIT) of 5.2 billion euros on Thursday.

The company thus maintained roughly the level from the first quarter - and once again exceeded market expectations.

And this despite the fact that ongoing delivery bottlenecks for important electronic components have been causing problems in the vehicle industry for months.

Daimler: There was still a mood of alarm in 2020 and tightened austerity measures

In the same period of the previous year, the Stuttgart-based company reported an operating loss of 1.7 million euros due to the collapse of the car markets in the pandemic, and the bottom line was even a minus of 1.9 billion euros.

At times there was a mood of alarm, the austerity measures that had already been initiated at Daimler were massively tightened again, and the fear of a lasting doldrums was palpable.

Not only employees of the Stuttgart group feared more troubled times, politicians also began to listen carefully, as car manufacturers and suppliers are major economic drivers.

In retrospect, the nervousness was exaggerated and possibly also unfounded, because especially premium manufacturers such as Daimler with its regular passenger car brand Mercedes-Benz or arch-rival BMW recovered surprisingly quickly from the slump in sales during the corona pandemic.

Daimler: record sales in China

The group sold around 1.16 million vehicles of its core brand Mercedes-Benz in the first half of the year - and thus only just missed its sales record from 2018.

In their most important market, China, the Swabians reported a record sales.

Here, the number of Mercedes cars sold rose to more than about 440,000. The group plans to announce next Wednesday what effects all of this had on sales and net profit in the second quarter.

Not only Daimler is benefiting from the market upswing for a long time.

With BMW * and Audi, for example, two direct competitors in the luxury car segment recently reported record sales for the first half of the year.

The industry-wide shortage of important components ensures longer order deadlines and currently prevents even higher sales figures, on the other hand, these problems have so far hardly burdened the earnings of the corporations.

Volkswagen * also recently reported high profits in day-to-day business.

In view of the scarce resources, the car manufacturers make do with, among other things, that they prefer to equip more profitable models with the scarce parts.

In this way, Daimler also benefits from the fact that customers are increasingly choosing larger cars and the group can enforce high prices on the market.

Daimler: Job cuts and short-time work are generating profits

On top of that, the effects of a number of austerity programs that Daimler had imposed on itself in previous years are now particularly noticeable in terms of operating profit.

The top management had initiated the shedding of tens of thousands of jobs.

As a justification, the group referred to the conversion of combustion engines to electric motors and the corona consequences.

Unions and works councils had accepted cuts, also because the group was in the red in mid-2020 and had to send a number of employees to short-time work.

Short-time working is still an issue at Daimler in 2021, albeit to a completely different extent and for a different reason: Because of the chip crisis, the company has been repeatedly stopping production in individual plants for months and sending thousands of employees on such state-paid breaks .

Industry expert Prof. Ferdinand Dudenhöffer says that the shedding of tens of thousands of jobs in particular has made the company leaner and has led to significant cost savings, which are also reflected in the operating result.

Especially since one-off costs for all kinds of severance payments were already largely in the 2020 balance sheet.

Daimler: On the electric offensive with a strategy update

Incidentally, Daimler still earns by far the largest part of its money with classic combustion vehicles. The number of fully electric cars sold made up just over 3 percent of all cars delivered in the first half of the year. How the upcoming struggle for supremacy in the e-age will end is open. So far, Daimler has planned that the entire Mercedes new car fleet should be CO2-neutral by 2039 at the latest, but other competitors such as VW have already formulated more daring goals. Will Stuttgart follow suit? For July 22nd, CEO Ola Källenius has announced a strategy update for the electric offensive. (dpa)

* Merkur.de is part of IPPEN.DIGITAL.

Source: merkur

All news articles on 2021-07-15

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