Mercedes-Benz will drop manual transmissions and “dramatically” reduce the number of combustion engine variants it offers as part a cost-cutting drive by parent Daimler to help ramp up electric investment.

Mercedes wants to reduce complexity within the development and production processes with a goal of slashing spending 20 percent by 2025 from 2019 levels, executives said last Tuesday during the company’s capital markets day, which was streamed online.

“We are going to reduce platforms and number of combustion engines very dramatically,” Markus Shaefer, Mercedes chief operating officer and R&D boss, said in the presentation. “We will drop our transmission count and eliminate manual gearboxes. Instead we will shift development resources toward electric drive.”

Mercedes said it would reduce the number of variants offered with combustion engines 40 percent by 2025 and 70 percent by 2030, both reductions are compared with the automaker’s current level.

Mercedes will phase out manual transmissions offered in its passenger cars between now and 2030, a spokesman said. The brand only offers manual transmissions in its compact range, including the A-Class, as well as the C-Class midsize model family. The replacement for the C-Class, due next year, isn’t expected to offer a manual transmission.

Daimler’s production of manual transmissions globally has fallen to just under 300,000 last year from a half million in 2016, according to figures from analyst firm LMC Automotive. Automatic transmission production rose to 1.56 million from 1.41 million over the same time frame, while Daimler’s production of dual-clutch transmissions rose to 680,000 from 457,000, LMC said.

This year manual transmissions will account for just 5.7 percent of Daimler’s gearbox production, LMC predicts.

“As electrification grows, manual gearboxes become less viable and dual-clutch transmissions have taken a chunk out of manuals as well,” Al Bedwell, LMC’s head of powertrain, said.

Mercedes has played a big role in the history of combustion engines, including the launch of the first diesel in a passenger car in 1936. However, electrification and the cost of upgrading combustion engines to comply with tougher emissions regulations have forced all automakers operating in Europe to reduce combustion engine programs.

Like Volkswagen Group, Daimler also has been penalized for cheating on emissions tests. In September 2019, German prosecutors fined Daimler 870 million euros ($1.01 billion) for “negligent violation” following a probe into the sale of rigged diesels.

Last month Daimler agreed to pay $2.2 billion to resolve a U.S. government diesel-emissions cheating investigation.

Daimler needed to cut its fixed costs to reduce its break-even point,. Chief Financial Officer Harald Wilhelm told viewers during the presentation to investors. He described the planned 20 percent cut in costs as a “a remarkable number in a period of transformation and investment into new technology,” but added that he believes Daimler can achieve its goal.

The reduction in complexity would be supported by a “fundamental transformation” in powertrain, Wilhelm said, adding that Daimler would cut its combustion investment “brutally” compared with the current level.

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