Daimler plans to slash headcount at its Mercedes-Benz cars division to help manage the disruptive shift to self-driving and electric cars.
The job cuts are aimed at saving more than 1 billion euros ($1.1 billion) by the end of 2022, Daimler said Thursday in a statement.
Management positions will be cut by around 10 percent, and company said it would also seek more than 300 million euros from cutting personnel costs - plus another 250 million euros in fixed costs - at its trucks business.
After two rapid-fire profit warnings earlier this year, new CEO Ola Kallenius is under pressure to map out a strategy to revive flagging profits, while at the same time ensuring that Daimler does not lose its technology edge.
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A costly transition to electric vehicles, together with legacy diesel issues, has seen Mercedes' Ebit margin outlook drop to a 3 percent to 5 percent range in 2019.
The company said it expected to achieve a return on sales from operating activities at Mercedes-Benz Cars & Vans of at least 4 percent in 2020 and at least 6 percent in 2022.
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Daimler said it needed to sell more electric vehicles to meet tougher European Union rules which force carmakers to cut carbon dioxide emissions from cars by 37.5 percent by 2030 compared with 2021 levels, and following a 40 percent cut between 2007 and 2021.
Profitability at Daimler's sprawling commercial vehicle operations -- including Mercedes-Benz trucks in Europe, Freightliner in North America and Fuso in Asia -- has trailed rival Volvo AB for years.
"Daimler urgently needs to move away from its 'spray and pray' investment philosophy and toward a materially more focused, sharpened allocation of its funds," Arndt Ellinghorst, a London-based analyst with Evercore ISI, said in a note. "Otherwise, the group will simply be unable to self-fund its premium mobility aspirations."
Despite improved third-quarter results, Kallenius "still faces multiple headwinds," Bloomberg Intelligence analyst Michael Dean said in a note.
Daimler's peers in Europe and the U.S. are also looking to cut costs. The industry is under pressure as environmental rules tighten and sales slow in key markets. Ford Motor cut its full-year forecast in October, while Volkswagen's Chief Financial Officer Frank Witter last week warned the next two years will be tough.
Reuters contributed to this report
