MBG MercedesBenz Group AG

By David Sachs

Mercedes-Benz Group's new strategy for its vans business will focus on the most profitable, top-end segments and boost electrification amid cost-cutting plans, it said on Tuesday.

The German auto maker will adapt the luxury strategy typical of its cars business to its private van customers. The company said it will more intensely target premium segments to generate profitable growth by concentrating on high-margin regions, channels, products and industries.

For its private van business, the company will hone its focus on China, it said. For its commercial van segment, Mercedes-Benz is pursuing what it calls a "premium" strategy and is well positioned for significant growth in the U.S., it said.

The company will also build its software-based revenue by expanding its customizable, in-van digital offerings, it said.

The vans business is undergoing a cost-savings initiative with the goal of cutting fixed costs by 20% by 2025 compared with 2019 levels and achieving adjusted return on sales in the double digits until 2030, Mercedes-Benz said. In 2022, Mercedes-Benz reported an adjusted return on sales of 11.2% for its vans division.

The strategy includes transitioning to direct sales while streamlining and digitizing various processes. The company aims to cut production costs by reducing the hours it takes to produce a vehicle by 25%, in part by optimizing energy use and incorporating more digital technology to increase efficiency. That target is set for 2025 and is weighed against 2019 figures, the company said.

As for its electrification targets, the car maker said it wants 20% of all vans sold by 2026 to be fully electric, with that share growing to more than 50% by 2030. Fully-electric vans accounted for around 4% of all van sales in 2022, according to the company's annual report.

Write to David Sachs at david.sachs@wsj.com

(END) Dow Jones Newswires

May 16, 2023 09:08 ET (13:08 GMT)

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