Zetsche wants to boost Mercedes profits, quality
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| Zetsche wants to boost Mercedes profits, quality |
AutoWeek | Published 10/11/06, 1:49 pm et |
PARIS - Mercedes-Benz is on the road to high profits and expects a 7 percent return on sales by the end of next year, says Dieter Zetsche, CEO of DaimlerChrysler AG.
In the past 12 months, Mercedes' productivity has improved 10 percent, and costs have decreased. Structural changes are boosting profits, Zetsche said in an interview at the Paris auto show.
Mercedes is trying to reverse the quality slide that tainted its reputation. The problems were caused by Mercedes' emphasis on fixing problems rather than preventing them, Zetsche said.
"We had to change the basic approach. We are challenging the quality strategy more," Zetsche said. "I am very confident that we have a much more resilient base for profitability."
But he stopped short of predicting when all of DaimlerChrysler's units would become profitable. Zetsche cited the recent announcement that the Chrysler group will lose $1.5 billion in the third quarter. Chrysler is expected to rack up $1.2 billion in losses this year, ending the turnaround that Zetsche spearheaded as CEO.
Looking at DaimlerChrysler's brands, Zetsche evaluated each unit:
The goal for Chrysler is a 5 percent return on sales - net pretax profits as a percentage of net sales. But Zetsche said he can't say when that will be achieved.
The commercial-vehicle division has made "significant progress," but its profits are not at benchmark levels.
Losses at DaimlerChrysler's financial arm also have been stemmed, and with the increase in interest rates, "there is a chance to move to potential profits," said Zetsche.
The Smart brand, "despite all the bashing based on financial failure, is extremely strong," he said. "The new Smart will offer more of everything that Smart offers today with better costs, and the breakeven point is coming down."
The Maybach brand won't be shuttered because it's not a financial drain, Zetsche said.
"I have not been able to detect any impact on my bottom line, so this is a nonissue."
"Maybach has started to prove that DaimlerChrysler can define the pinnacle of automotive engineering, and reaction to the product across the board has been very positive."
Zetsche wouldn't say how many Maybachs have been sold, saying only that the segment is smaller than Mercedes had anticipated.
In the past 12 months, Mercedes' productivity has improved 10 percent, and costs have decreased. Structural changes are boosting profits, Zetsche said in an interview at the Paris auto show.
Mercedes is trying to reverse the quality slide that tainted its reputation. The problems were caused by Mercedes' emphasis on fixing problems rather than preventing them, Zetsche said.
"We had to change the basic approach. We are challenging the quality strategy more," Zetsche said. "I am very confident that we have a much more resilient base for profitability."
But he stopped short of predicting when all of DaimlerChrysler's units would become profitable. Zetsche cited the recent announcement that the Chrysler group will lose $1.5 billion in the third quarter. Chrysler is expected to rack up $1.2 billion in losses this year, ending the turnaround that Zetsche spearheaded as CEO.
Looking at DaimlerChrysler's brands, Zetsche evaluated each unit:
The goal for Chrysler is a 5 percent return on sales - net pretax profits as a percentage of net sales. But Zetsche said he can't say when that will be achieved.
The commercial-vehicle division has made "significant progress," but its profits are not at benchmark levels.
Losses at DaimlerChrysler's financial arm also have been stemmed, and with the increase in interest rates, "there is a chance to move to potential profits," said Zetsche.
The Smart brand, "despite all the bashing based on financial failure, is extremely strong," he said. "The new Smart will offer more of everything that Smart offers today with better costs, and the breakeven point is coming down."
The Maybach brand won't be shuttered because it's not a financial drain, Zetsche said.
"I have not been able to detect any impact on my bottom line, so this is a nonissue."
"Maybach has started to prove that DaimlerChrysler can define the pinnacle of automotive engineering, and reaction to the product across the board has been very positive."
Zetsche wouldn't say how many Maybachs have been sold, saying only that the segment is smaller than Mercedes had anticipated.
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