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Mercedes Parent Company Planning Major Cuts

Industry News / 1 Comment

Daimler to sever ties with Renault-Nissan-Mitsubishi alliance and cut thousands of jobs.

The automotive industry was shocked last year when the long-time boss of the Renault Nissan Alliance, Carlos Ghosn, was arrested on charges of financial misconduct. Ghosn lost his several positions within the company, and the saga continues to drag on, with additional charges for misusing Nissan's funds being pinned on the former boss. Now, news is emerging that Daimler, Mercedes' parent company, will seek to cut ties with the Renault Nissan Mitsubishi Alliance.

While this decision is partially due to Ghosn's financial misdeeds, this news also comes as current Daimler CEO, Dieter Zetsche, is expected to become chairman in 2021 and be replaced by Ola Kaellenius. While Zetsche had been a strong supporter of collaborating with Ghosn and the Renault Nissan Alliance, Kaellenius looks set to make major cost cuts in a bid to save money. Kaellenius is allegedly looking to save 6 billion Euros, or $6.75 billion, by 2021.

The changes have already begun - Nissan's Infiniti brand has dropped the Q30 and QX30, which were based on Daimler's compact car platform that underpin the Mercedes-Benz A-Class hatchback and GLA-Class crossover. Additionally, Daimler's city-car brand, Smart, has decided to work with Chinese automaker Geely for its next models, rather that working with its current partner, Renault. Geely has become Daimler's biggest shareholder as a result of its 9.7% stake, and it seems like the two automotive giants will continue to collaborate, including in mobility services.

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As part of his bid to save money, Kaellenius is expected to attempt to eliminate approximately 10,000 jobs. This will likely be done via voluntary separation, since Daimler has decided to cease forced redundancies until the end of 2020. An overall slowing in new car sales and the increasing costs of developing electric vehicles and self-driving technologies contributed to Daimler experiencing a 22% decline in operating profits for the fourth quarter of 2018, likely prompting Kaellenius' plans to cut costs.