Mercedes 2006 Annual Report Download - page 98

(505)
50,015
1,629
2,418
1,214,855
1,216,838
104,345
2,415
54,579
1,663
2,176
1,230,951
1,251,797
99,343
Operating profit (loss)
Revenues
Investments in property,
plant and equipment
Research and development
expenditure
Production
Unit sales
Employees (Dec.31)
82
Mercedes Car Group
Substantial efficiency gains achieved through CORE program | Strong demand for new products |
More focused business model at smart | Significant increase in profitability
Significant increase in earnings. The Mercedes Car Group, com-
prising the brands Mercedes-Benz, Maybach, smart, Mercedes-
Benz AMG and Mercedes-Benz McLaren, sold 1,251,800 vehicles
in 2006 (2005: 1,216,800). Revenues of €54.6 billion were 9%
higher than the prior year’s level.
As a result of the measures implemented to boost efficiency as
part of the CORE program, the Mercedes Car Group substantially
improved its profitability as the year progressed. Combined with
higher sales volumes and a favorable model mix, these measures
played a key role in increasing operating profit to €2.4 billion
(2005: operating loss of €0.5 billion; see page 44).
CORE efficiency-improving program proceeding according to
plan. The CORE efficiency-improving program, launched in
February 2005, is designed to enable the Mercedes Car Group to
achieve a return on sales of 7% in 2007. We continued with the
implementation of the program during the year under review. The
measures we have introduced are having the desired effect and
also played a major role in helping us increase efficiency and prof-
itability in 2006. During the year under review, we implemented
more than 14,000 additional measures along the entire value chain.
These measures will lead to further sustained improvements in
the operating units. At present, we are developing a set of approxi-
mately 100 predefined modules that will be available for all
model series. These modules will help us to further boost quality,
reduce costs and shorten development times. Due to the inte-
gration of the Mercedes Car Group’sdevelopment activities and
the Corporate Research department, innovations will be designed
so that they can be applied in several model series.
Wehavealso reorganized production and have standardized our
structures and processes, thereby laying the groundwork for a
substantial increase in productivity. Our goal is to reduce produc-
tion times for our vehicles in the next few years by 30%; an ini-
tial 12% decrease was achieved in 2006. In the year under review,
we also succeeded in significantly reducing materials costs,
despite the difficult situation in the raw-material markets.
In viewof the ongoing difficult market situation and intensely com-
petitive conditions, staff reductions became unavoidable at the
Mercedes Car Group in order to increase productivity. For this
reason, the Board of Management approved a package of mea-
sures at the end of September 2005 calling for a reduction of 8,500
employees at the Mercedes Car Group locations in Germany.
During the period of October 1, 2005 to September 30, 2006,
approximately 9,300 employees signed voluntary severance
agreements or had already left the company. During the fourth
quarter of 2006, an additional 400 employees accepted the
severance offer.
% change
.
+9
+2
-10
+1
+3
-5
06/05
Amounts in millions of €
20052006