After bleak Mercedes-Benz results, CEO promises 'innovation offensive'

Mercedes-Benz is "doubling down on efficiency" as it gears up for "the biggest product and technology innovation offensive in our history," its CEO Ola Kallenius told CGTN in an exclusive interview.  

Kallenius spoke to CGTN on the day Mercedes-Benz warned of looming cost cuts and gave a bleak outlook for 2025 after its profits plunged almost a third last year amid a slump in China and slowing electric car sales. 

Shares of the car giant fell over three percent in Frankfurt following the announcement of its results, in which net profit slid 28 percent to $10.8 billion while revenues were also down about four percent to $152 billion. 

The group announced plans to slash production costs by a tenth in the next two years and warned that 2025 would be another difficult year, with sales set to slow further and profit margins worsening.

Kallenius admitted the market was "quite challenged, especially in China, towards the second half of the year" but defended what he called "very solid results, especially the free cash flow - above €9 billion [$9.4 billion] is a very, very strong number considering the macro and market environment."

Asked whether the demand for EVs is disappointing manufacturers forced to pivot towards greener vehicles, Kallenius outlined differences in global trends.

"The EV market around the world is heterogeneous," he said. "In China it has started going up from the bottom – and we have our strongest footprint on the higher segments, where still the electrified high-tech combustion engine is the choice customers are looking for, where we have a very, very strong market position. 

"But we are gradually growing organically our EV footprint – and in Europe, in the United States as well, we're about to launch a whole host of EV vehicles here in the next two to three years," he continued. "We are very confident that we will grow our EV footprint over the next two to three years. But we have a good foundation to stand on."

Efficiency and technology

In such a tough market, the imposition of trade tariffs between the three largest markets of China, the EU and U.S. is the last thing Mercedes-Benz needs – but again Kallenius declared his company ready for the battle, promising to maximize efficiency while unveiling new technology. 

"We have the biggest product and technology innovation offensive in our history in the next couple of years," he said. "But it's also about efficiency. We're doubling down on efficiency and we're going through literally the whole company, the whole business system and leaving no stone unturned. 

"We want to save up to €5 billion [$5.2 billion] compared to our original plan per year in 2027 and savings leading up in 2025 and 2026 towards that number. We're investing more than we have ever done before into new technology and products, but at the same time, we're emphasizing efficiency."

While facing competition from Chinese brands becoming increasingly popular in Europe, Mercedes-Benz is also targeting the growing Chinese domestic market. 

"In China over the next years, we are embarking on a 14 billion renminbi [$1.92 billion] investment program into new models, revamping our factories and getting ready for launch of these new models," Kallenius said.

"In 2024, in very challenging market conditions, we were the number one luxury and premium brand in China and 'held the fort'. But it's not just about that – it's now going forward into the future with new and attractive products specifically designed for the Chinese market and build on that momentum."