Daimler to increase cost cuts to narrow profit gap with BMW, Audi

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BERLIN (Reuters) -- Daimler CEO Dieter Zetsche said the car and truck maker would continue to cut costs as its premium brand Mercedes-Benz seeks to narrow the profitability gap with rivals.

The carmaker has fallen behind its German peers since it emerged from a messy divorce with Chrysler in 2007. Mercedes has been overtaken by both Audi and BMW in sales and profits.

"Our efficiency measures are having an impact across all divisions and we will structurally safeguard and expand these measures," Zetsche told shareholders at the company's annual general meeting today.

Earnings before interest and tax (EBIT) at the Mercedes-Benz Cars unit, which includes the Smart brand, were 6.2 percent of sales in 2013, lagging Audi's 10.1 percent and BMW's automotive margin of 9.4 percent.

Daimler has already been targeting 4 billion euros ($5.5 billion) in cost cuts. By the end of 2014, it aims for annual savings of 2 billion euros at Mercedes-Benz Cars and 1.6 billion euros of cost cuts and revenue gains at Daimler Trucks.

The company relaunched its C-class compact late in 2012, unveiled a new S-class flagship limousine in July 2013 and launched a new C Class in March.

In February, Daimler said it expected group earnings before interest and tax to increase "significantly" in 2014 from the 7.9 billion euros it reported last year.

In the first three months, Mercedes brand sales rose 15 percent to 374,276, while Audi deliveries were up 12 percent to 412,850. This was just 15,409 vehicles behind the best-selling premium brand BMW with 428,259, a rise of 12 percent.

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