In the car business, Mercedes boss Ola Källenius (53) full of luxury
. The van division should also radiate more glamor in the future. Vans boss Mathias Geisen (44) does not have to switch to “luxury only”. Geisen presented the future strategy of his division on Tuesday. It also provides luxury models for private buyers in the van business, but Mercedes is content with premium for commercial customers. The latter account for around 80 percent of the business, with annual sales recently amounting to a good 17.2 billion euros.
Above all, however, Geisen must electrify. “We want to be the pacemaker for the electrification of the industry,” said the manager. To date, Mercedes is far from it. The Sprinter, the Vito and the V-Class are now also available as E variants. However, of the approximately 415,000 units sold by Mercedes-Benz Vans last year, only 3.6 percent were electric models.
Geisen wants to pick up speed with the new e-architecture called “Van.EA”. With slight delays: Instead of starting in 2025 as planned, all new models of the brand are to be based on it from 2026. This means that Mercedes-Benz Vans will soon no longer be developing new combustion models. “We are fully committed to the topic of electrics,” says Geisen, but also adds: “We have not planned to stop using combustion engines.” Some customer groups and some sales markets are still hesitant when it comes to electromobility.
Nevertheless, Geisen wants to gradually increase the proportion of electronics in sales. He has set himself the target of 20 percent by 2026, and by 2030 more than half of all Mercedes vans delivered should be BEVs. Too unambitious? “The way we are set up, we could also deliver 100 percent electric vehicles in 2030,” counters Geisen. But he doesn’t believe that the market will develop accordingly.
With the new e-architecture, Mercedes-Benz Vans also wants to reduce complexity in its own production network. Compared to the current combustion engine portfolio, the number of variants offered will be reduced “by more than 50 percent”. This is also intended to help “significantly improve our cost structure,” says Greisen. “We have to get that under control.”
At the same time, the future platform should help to be able to offer vans “with a completely new luxury positioning”. This is particularly important for private customers in China. To date, Mercedes-Benz Vans has only sold 8 percent of its vehicles in the world’s largest single market. Similar to the USA (16%), the manufacturer wants to grow there in order to become less dependent on business in Europe. Mercedes-Benz Vans currently sells around 60 percent of its vehicles at home.
Despite the costs of ramping up electromobility, Geisen and Co. are aiming for stable returns. 16.5 percent as last in the first quarter will not be able to be maintained, said CFO Mario Pucher. In any case, the aim is to remain in the double digits until 2030. Lower margins would be incompatible with the goals of CEO Källenius.
The cost pressure is increasing
In order to be able to maintain the current level of returns, the van division wants to reduce fixed costs by more than 20 percent by 2025 compared to 2019. To date, the company has made little progress: in 2022, according to Pucher, Mercedes had only achieved 7 percent. “We had made more than 10 percent.” But inflation and problems in the supply chain have slowed things down recently. “But this year we will take a clear step towards 20 percent,” promises Pucher.
Mercedes-Benz Vans does not intend to cut staff as part of the cost program. After bitter years in the recent past, the brand has already gone through a drastic austerity course. Where competencies can be bundled, positions are not filled, said Geisen. “But we have no dismantling plans.” The van unit is already “an extremely slim team”. Instead, Greisen and Pucher hope for an “increase in performance” in production through the leaner portfolio and digital processes. Production hours per vehicle are set to drop by a quarter by 2025.
As a pioneer, Mercedes-Benz has planned the new plant in Jawor, Poland. The company would have been happy to share the costs for the location through a cooperation with Rivian. But the US manufacturer surprisingly jumped off
. For the time being, Rivian is concentrating on the US market, said Geisen, but left a back door open for the future: “We’ve always talked and never parted ways because of discord.”