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Daimler workers to protest over dealership revamp plans
April 25, 2014 / 9:46 AM / 4 years ago

Daimler workers to protest over dealership revamp plans

FRANKFURT, April 25 (Reuters) - Workers at Daimler will hold a demonstration on Monday over plans by the German carmaker to restructure its network of showrooms owned and operated by the company.

Daimler has said it is looking at what to do with these dealerships as part of plans to cut costs at its premium brand Mercedes-Benz and narrow the profitability gap with rivals.

“We fear that branches could be spun off from Daimler and sold,” a spokeswoman for union IG Metall said in a statement.

A spokeswoman for Mercedes-Benz said no decisions had yet been taken on the network.

“There are different plans under consideration for our own retail operations, about which we are in talks with staff representatives,” she told Reuters.

The union said it expected around 4,000 people to take part in Monday’s action.

Daimler employed around 275,000 people in total in 2013.

Analysts would welcome any plans by Daimler to revamp its own dealership network, especially in light of Daimler’s high labour costs in comparison with rivals.

In Germany, Mercedes depends on its unprofitable company-owned dealerships for roughly half of its car sales, a bigger share than for rivals Volkswagen’s Audi and BMW, which rely more on franchises.

ISI analysts estimate labour costs are equivalent to 15.9 percent of Daimler’s sales, against 11.5 percent for BMW and 10.4 percent for Audi.

“This vertical sales integration is the key reason for Mercedes’ margin underperformance,” ISI analyst Arndt Ellinghorst wrote in a note. “Addressing this issue via restructuring/selling parts of these activities should be seen as a strong positive.” (Reporting by Victoria Bryan; Additional reporting by Laurence Frost; Editing by Mark Potter)

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