Daimler Reaches Labor Accord on German Dealer Disposals

Daimler AG, the third-biggest maker of luxury cars, reached an agreement with labor representatives that allows the German company to sell some Mercedes-Benz dealerships that it owns in the country.

Daimler pledged to avoid mass firings through 2023 and to invest 500 million euros ($670 million) in sales outlets in coming years, the Stuttgart-based manufacturer said in a statement today. The sales network will be bundled into regional distribution centers as of 2015, while showrooms for passenger cars and commercial vehicles will be separated.

The push to reduce Daimler’s wholly owned retail organization in Germany is part of Chief Executive Officer Dieter Zetsche’s effort to lift the Mercedes carmaking division’s operating profit to 10 percent of revenue. The sales organization can earn a maximum margin of 2 percent, Ilse Kestin, an IG Metall union representative, estimated in April.

Zetsche has vowed that the Mercedes car brand will beat Bayerische Motoren Werke AG and Volkswagen AG’s Audi division, currently the two biggest makers of luxury autos, in deliveries and profitability by the end of the decade.

“This is a clear commitment to our own retail organization, which will be strengthened sustainably and becomes more competitive,” Ola Kaellenius, head of Mercedes sales, said in the statement.

Daimler has also struck an agreement on the future of its biggest car plant, in the Stuttgart suburb of Sindelfingen. Details are scheduled to be announced at a joint press conference tomorrow hosted by Markus Schaefer, who manages Mercedes production, and Ergun Luemali, head of the local works council. The talks focused on investments in the site in exchange for more flexibility on work times and job assignments.

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