Mercedes-Benz Job Cuts: Why Is The Automaker Cutting 1,100 Management Positions?

Citing increasing costs to meet emissions regulations and develop and produce plug-in hybrids and all-electric vehicles, Daimler (DAI.DE) has announced a cost-cutting measure of €1 billion ($1.1 billion) that will affect a reported 1,100 management jobs at Mercedes-Benz by the end of 2022.

The automaker said that jobs will be reduced in both its management area and other indirect areas of the business, making up 10% of the company’s personnel, Autoblog reported.

Through the cost-cutting measures, Daimler said it expects Mercedes-Benz Cars & Vans to achieve a return on sales of at least 4% in 2020 and at least 6% in 2022 – before any possible import tariffs.

Daimler is also capping its spending to the 2019 level and said it will be reduced in the medium term.

On the company’s truck side of the business, Daimler expects a demand decrease in Europe and the U.S. to continue until 2021 while its bus division sales should increase. The company’s truck and bus business units account for 55% of its revenue, despite only making up 30% of its global revenue.

The company has initiated personnel costs of €300 million ($331 million) by 2022 in the truck and bus division and a reduction of variable costs of €250 million ($276 million), it said. Daimler will also reorganize its organization, reducing its Brazilian operations and realigning its Japanese division.

Daimler said it expects a return on sales of at least 5% in 2020 and at least 7% in 2022 from its truck and bus units.

The company is also looking for net liquidity of more than €10 billion ($11 billion).

Shares of Daimler stock were down 0.90% as of 12:18 p.m. EST on Friday.