Daimler Records Big Profits and 2018 Plans

German automaker Daimler has been reeling from high profits brought in during 2017. This is especially good news considering the company has announced a need to spend heavily during 2018 in order to keep up with rising demand, advancements in technology, and an ever-changing automotive industry.

The bulk of the anticipated high expenditure will result from new models and changing technology, such as battery-powered vehicles and automated features. The manufacturer also strives to keep up with companies that have implemented new transportation options such as car-sharing and ride-hailing services.

Government restrictions on auto emissions and greenhouse gases are among the top reasons behind the industry-wide shift to electric vehicles and ride-sharing services, although electric vehicles have declined in popularity in many areas due to high costs, limited range, and long charge times. Lower costs, however, could potentially draw more consumers to battery-powered vehicles.

Following recent trends, the company has calculated an earning potential in line with projected costs rather than increasing profits, despite 2017’s record profit of 10.9 billion euros, an increase of 24 per cent over the previous year, due in large part to strong sales of the company’s Mercedes-Benz SUVs and the new E-Class luxury sedan.

According to CEO Dieter Zetsche, Daimler’s core business remains highly profitable and capable of providing the investment needed to remain a leader even amidst industry changes. An investment of approximately 10 billion euros is planned for the next few years, with new concepts in the works, including a new electric-driven EQ sport-utility vehicle, which is scheduled to launch by 2020.

“Our outlook is dampened by currency exchange rates as well as another expected rise of spending demands,” said Zetsche.

According to Evercore ISI analyst Arndt Ellinghort, Daimler’s results and guidance signal investment and exchange rate challenges that are likely to hit profitability across the industry. “Of course, we are aware of many of these burdens,” said Ellinghorst, “but to see it black and white is still shocking.”

“The outlook is a disappointment,” said Bankhaus Metzler analyst Juergen Pieper. “The drop in earnings at the cars division shows profit dynamic is lacking.”

Ellinghorst calculated an additional 300 to 400 million euros in extra restructuring costs, as well as an increase of up to 700 million euros in R&D spending. “Daimler is not alone,” said Ellinghorst. “It will be harder for all companies to maintain their profitability.”

Daimler is hoping to offset costs and fend off new competitors by preparing for a major corporate overhaul, which includes a holding company with three legally-separate units, Mercedes-Benz Cars & Vans, Daimler Trucks & Buses, and financial services.

 

Did you miss this?

Other Popular Stories

  • Too much wind-power may warm the environment more than oil or coal — at least in the short term. Harvard research suggests cautious planning needed
  • Engineering and building under water — how is it done, and the modern use of Cofferdams
  • Oil drags capital spending down, though some bright spots remain: Statistics Canada
  • Scientists Use Machine Learning to Automate Atomic-Scale Manufacturing
  • Bombardier promises to deal with Toronto's streetcars, while CSeries sales take off
  • Federal money continues to flow to clean technology innovators
  • Canada keeping up pressure on US for Keystone XL approval
  • Ontario on track to lead country in employment, economic growth
  • Inter Pipeline will spend $2.6 billion to transport bitumen to oil sands projects
  • Cascade Aerospace named a Hercules heavy maintenance centre
  • $ Trillions needed to decarbonise global energy supply to meet Paris Agreement targets
  • Latest Update on KRACK (Key Reinstallation Attack): the flaw in WPA2 protocal for WIFI systems
  • General Dynamic Land Systems $15-billion deal with Saudis at risk over Kingdom's alleged involvement in murder plot
  • $26 Trillion needed over 13 years to power infrastructure for world's fastest growing economies
  • Google Increasing Artificial Intelligence in Military Spy Drones
  • Demand for industrial real estate soaring in Canada: report
  • International Trade Commission Hands Down Verdict in Bombardier versus Boeing Dispute
  • Wind more economical than nuclear: offshore wind turbines in U.K. significantly less expensive per megawatt than planned nuclear
  • Green building technology to grow annually by 10.12% to the year 2023
  • China to totally ban gas and diesel in new car market; with interim targets of 20% electric or hybrid by 2025
Scroll to Top