Daimler has announced plans to cut fixed costs, capex and R&D spending at Mercedes-Benz by more than 20% by 2025 as part of a strategy overhaul to take the brand further upmarket.

The decision will have Mercedes-Benz change its focus from chasing sales volume to the industry’s more profitable segments: limousines and sport-utility vehicles. Chief Executive Ola Kaellenius told investors that compact vehicles like the Mercedes-Benz A and B-Class had helped rejuvenate the brand, but this would not be where Daimler would prioritise resources going forward.

Instead of chasing volume, Mercedes-Benz will aim to double sales of high-end Maybach branded cars and ramp up sales of AMG and G-Wagon derivatives, including electric variants.

Cost cutting and efficiency measures include eliminating manual gearboxes, and slashing the variety of combustion engines on offer by 70% by 2030. Around 5,000 staff have agreed to accept buyouts or early retirement, the company said in a press release.

Additional strategy measures will be focusing on new, more efficient vehicle platforms, more affordable battery systems for electric cars as well as the launch of an electric limousine, the EQS which is on track to hit showrooms next year.

In response to the decrease in sales as a result of COVID-19 the company has stopped building sedans in the U.S, shifting its focus on SUV’s, its fuel cell truck development with Volvo and has paused an automated development alliance with BMW.

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