* Daimler seeks cuts to offset lower margins on small cars
* Production of GLA compact planned for China, Brazil
* Daimler still on lookout for additional factory
(Adds CEO comments on details of production of the
GRANADA, Spain, Feb 11 Germany's luxury auto
maker Daimler will pursue deeper cost cuts than an
initially targeted 2 billion euro in savings by 2014 as a way to
raise profits at its Mercedes car division, Chief Executive
Dieter Zetsche said on Tuesday.
The cost cutting effort will help Daimler reach an average
annual return on sales of 10 percent for its Mercedes-Benz Cars
division in the medium term, Zetsche said at a presentation of
the Mercedes-Benz compact Sports utility vehicle, the GLA.
The rise in sales of lower-margin compact cars like the
A-Class and B-Class vehicles make additional costs cuts
necessary to ensure the Stuttgart-based auto maker can reach its
profit goal, Zetsche said.
By 2020 compact cars will account for 30 percent of
Daimler's revenues, up from around 15 percent at present.
Another way to raise the profitability of small cars was to
raise the efficiency of production and by cutting manufacturing
time down to 30 hours per vehicle.
Zetsche reiterated the auto maker was on the lookout for a
new factory to build small cars.
"We are thinking about an additional factory, which in all
likelihood will not be in Germany," Zetsche said.
Last month Zetsche said the Germany-based auto maker may
build another factory in North America as a way to ramp up
global production capacity for compact cars.
The GLA compact sports utility vehicle should be delivered
to clients in Europe in mid March, Zetsche said.
The car, which is being produced in Rastatt, Germany and in
Kecskemet, Hungary, will also be produced in China this year,
Zetsche said. Production is also planned for Brazil in 2016.
(Reporting by Ilona Wissenach in Granada; writing by Edward
Taylor, editing by William Hardy)