Growing billion dollar risks in the diesel exhaust scandal exacerbate the crisis at Daimler in the midst of the expensive transition to electric cars. The German carmaker warned of a further 1.1 to 1.5 billion euros in expenses for procedures in connection with the alleged manipulation of exhaust gas cleaning.
According to provisional figures, the Group’s operating profit of EUR 5.6 billion will also be a good EUR 1 billion lower than expected on the market recently. With a return of four percent on its Mercedes-Benz brand, the world’s largest manufacturer of premium cars, according to sales figures, drove less than all other German car manufacturers.
The group had to publish a profit warning for the third time since the start of the new boss Ola Källenius in May last year. Most recently, he lowered the forecasts in June and July 2019. The shares plummeted – they were almost two percent in the red.
The diesel crisis hits Daimler in an already difficult phase, in which the entire industry has to spend tens of billions on weakening markets to switch to electric cars. Daimler is fixing around three million vehicles with a software update due to excessive nitrogen oxide emissions, a good third of which at the official behest of the Federal Motor Transport Authority (KBA).
The number of claims for damages from car buyers and investors is growing. Most recently, the law firm Tilp filed lawsuits from investors for a total of EUR 900 million in damages. Daimler rejects allegations of fraud and wants to defend itself using all legal means. In the United States, investigations are still ongoing on suspicion of exhaust gas manipulation. The provisions for diesel gates announced by Daimler amount to around EUR 3 billion.
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According to preliminary figures, last year’s operating profit fell by almost 50 percent to EUR 5.6 billion. The additional diesel effort is not included here. Daimler previously announced a decline of more than 15 percent. In addition to weaker growth in sales of cars and shrinking sales of commercial vehicles, Daimler is also suffering from homemade problems. The production of important models stalled.
At Mercedes-Benz Vans, a further 300 million euros have to be spent on “reviewing and prioritizing the product portfolio”. The small division breaks down the company’s operating loss of EUR 2.4 billion. At 3.7 billion euros, Mercedes-Benz Cars earned about half as much as in 2018, although the brand with the star kept sales at a record level with an increase of 0.7 percent.
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Källenius has to cope with the inheritance of his predecessor Dieter Zetsche with a savings program. In mid-November, the Swede announced that it would cut personnel costs by around 1.4 billion euros by the end of 2022. According to his plan, Mercedes-Benz Cars would still crab with only a five percent return in the coming years.
By 2022, more than 10,000 of the world’s 300,000 or so jobs will be cut. “The restructuring program launched in November should soon be expanded,” said Frank Schwope, car expert at the Norddeutsche Landesbank. “Driving on sight is more popular now than ever.” (Reuters / apa / red)
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