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Daimler's Restructuring Plan

As is the case with all automotive manufacturers in these troubled times, Daimler is taking the necessary steps to safely come out of the economic Valley of Death. But unlike most of the others, who only plan to survive, Daimler says its plan is intended to make the emerge stronger than before.

Daimler's plan is comprised by rigid cost management, reduced labor costs and reduced working capital, as well as by maintaining financial flexibility and executing further efficiency programs in all divisions.

In the first months of 2009, the German company intensified these actions, cutting the costs of business travel, consultancy fees and general overheads. Wage increases have been limited, while executives have had to accept salary reductions of nearly 30 percent.

Daimler braces for further decline in business volumes this year. Revenue is likely to be significantly lower than in the prior year in all automotive divisions and further substantial burdens on Group earnings are anticipated.

"We intend to remain a strong company also in times of weak markets. Although the crisis is forcing us to cut costs wherever we can, we will not jeopardize our future by reducing essential investment," Dieter Zetsche Daimler Board of Management chairman said in a release.

By "investment" the official means his company's intentions to reduce the average CO2 emissions of its new car fleet in Europe to less than 140 grams per kilometer. The company is on track to achieve this, as 24 models (a third of them from the five liter category) of its range already do that.

The company will publish its financial results for the first quarter of 2009 on April 28, but expects a  significant loss. The situation is expected to improve further down the year, with the large contribution of the new Mercedes Benz E-Klasse.
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About the author: Daniel Patrascu
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Daniel loves writing (or so he claims), and he uses this skill to offer readers a "behind the scenes" look at the automotive industry. He also enjoys talking about space exploration and robots, because in his view the only way forward for humanity is away from this planet, in metal bodies.
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