Daimler wants Mercedes margin above Toyota's: report

FRANKFURT (Reuters) - Daimler AG (DAIGn.DE) aims to have profitability at its Mercedes-Benz Cars premium division exceed that at Japan's Toyota Motor Co (7203.T), Chief Executive Dieter Zetsche was quoted as telling a Swiss magazine.

Zetsche also told Bilanz that Daimler intended to keep its stake in aerospace group EADS (EAD.PA) for years more.

Asked whether the Mercedes operating margin could reach its 10 percent target before the goal of 2010 at the latest, Zetsche said: "We want to attain this target in a sustainable way, not just hit it."

The strong euro, high commodity prices and investments to reduce carbon dioxide emissions pose challenges, he said, but added: "Ten percent is a very demanding but realistic target."

Reminded that this would put the margin above that of Toyota -- the mass carmaker with the highest profit margins -- he confirmed this was what he meant. "We want to be ahead with our Mercedes brand, in profitability as well."

Asked why Daimler does not divest its stake in EADS -- 15 percent of the capital and 22.5 percent of the votes -- Zetsche said it would not be in the interest of Daimler shareholders to sell when EADS stock was undervalued.

He also acknowledged the stake played a political role in the careful balancing of Franco-German influence at EADS, noting that Daimler had informed the German government when it last reduced its EADS stake.

"We have no reason to test the political viability of possible other steps in the years ahead. Thus the question (of selling its EADS stake) does not arise," he said.

(Reporting by Michael Shields; Editing by Erica Billingham)