When daimler chief executive ola klleniustook to a las vegas phase with film-maker james cameron in january to unveil an avatar-inspired mercedes-benz that points far in to the future, executives at century-old teams headquarters had been more preoccupied using present.

Strained with billions of euros in costs linked to airbag recalls and alleged emissions manipulation, pre-tax profit had dropped more than 60 % in 2019 in the same way the business necessary to fund its belated push into electric automobiles. then came the pandemic, plant closures and another share price leap.

But by the end of summer, hardly per year after using the top work, mr kllenius and his primary monetary officer harald wilhelm had pulled off just what many people thought impossible.

Within worst product sales quarter maybe since world war two, we were cash flow good, the 51-year-old swede told the financial instances.we modified our manufacturing so quickly that regardless of covid-19 we lowered our stock along with a much better working capital balance at the conclusion of june than we'd after march.

An immediate recovery in china, daimlers largest market, aided limit losings to 1.7bn for the one-fourth, as performed its relatively low experience of a few of the worst-hit regions, particularly south america.

Column chart of free cash flow from professional division* (bn) showing daimler

After being accused by shareholders of overseeing a lost 12 months, and risking huge fines from brussels by failing to considerably reduce fleet-wide carbon emissions, indicators of intention emerged in fast succession from mr klleniuss boardroom.

Recently daimler revealed it would offer its smart plant in france; settled outstanding united states dieselgate instances for approximately $2.2bn; committed to chinese battery pack cellular manufacturer farasis; and established a jv with volvo to build up hydrogen vehicles while shelving its ill-fated hydrogen car task.

Unlike rival volkswagen, which has ruled out using the services of tech giants to create software for the new vehicles, daimler joined up with causes with nvidia to develop independent operating technology. mr klleniustold the ft the carmaker could be open to further partnerships to get speed, to achieve technical benefit, to fairly share risk.

People have actually begun to believe the executive duo could be getting sufficient momentum to push through companys long awaited cost-savings program, including axing at least 10,000 tasks worldwide.

Weve turned from being one of the most outspoken experts to saying we think they can do so, stated michael muders, a portfolio manager at institutional investor union, a daimler shareholder.

Driving the optimism is an extensively held hope that coronavirus crisis will help mercedes cope with a millstone with hung around the three-pointed star since the age of previous manager dieter zetsche a tasks guarantee that safeguards around 130,000 daimler workers in germany, in which labour prices are high, for the rest of the ten years.

The unions realise that they must go, while the board realises that it features an opportunity to renegotiate the contract, stated ingo speich, a profile manager at shareholder deka.

Inside regard it truly helps you to have significantly more pressure on expenses the management got a little bit of a tailwind through the crisis for these types of renegotiations.

Column chart of revenues (bn) showing daimler product sales

As he established mercedes latest leading s-class saloon on wednesday, mr klleniussaid daimlers restructuring would definitely need to go slightly deeper, although he declined to express exactly how many even more tasks would get.

He said the pandemic had revealed the automobile industry for what its: very capital-intensive, very high break-even points way too high for daimler, for mercedes, including that carmaker had a need to increase down on performance.

But he said daimler could count on early pension and natural attrition to slim its workforce.

I do believe the very last time we really officially set someone down in germany ended up being back the 1960s, he stated.

However, the move that led unions to extract the work contract from mr zetsche the institution of a holding framework encompassing daimlers cars, vehicles and financing hands has cost the business 1bn. the figure is placed to increase by 150m-200m per year, based on mr muders, with all the discounts ultimate objective still out-of picture.

The argument ended up being: we are building a keeping construction to float the trucks business, but this never ever occurred, he said. various other investors have actually urged the company to think about listing at the least a little share for the unit next year.

For now, mr klleniusseems more intention on moving mercedes on from exactly what he as soon as branded top complexity, and decreasing the quantity of models and alternatives it provides.

The ultra-compact smart brand name will likely to be moved to asia, where it should be made by geely, daimlers biggest shareholder with a near 10 % stake. the a-class sedan will not be manufactured outside germany.

We will adjust the portfolio to the greatest pockets of profitability, mr klleniussaid, including that mercedes was not going to chase amount in lower-margin compact segments and therefore our company is ready to eliminate models that individuals do not believe meet with the profitability targets.

The covid-19 crisis, he said, made him concern: whats your core company? just what do you realy invest in? whats your competitive strength? how will you be sure that you develop upon that?

The answer is a renewed focus on the deluxe brands traditional high-margin designs, and on just what could prove its breakthrough electric vehicle, after a disappointing sales begin for the very first modern-day battery-powered vehicle.

The eqs, an emissions-free version of the s-class considering be launched the following year, will have a variety of 700km, mr klleniussaid, really outpacing also marketplace frontrunner tesla by which daimler as soon as held an almost 10 percent stake.

Line chart of market limit (bn) showing daimler

More to the point for mercedes margins, the design would be the very first become built having its standard skateboard system.

When of truth will undoubtedly be if they have actually a system for electrification that can be used on a bigger scale for more designs, stated dekas mr speich. bmw is far forward, and vw besides.

Daimlers issue usually it must rapidly get surface in the electric battle while gratifying investors used to handouts until recently it had been europes sixth-biggest dividend payer.

If daimler had been an exclusive company, they would say: no dividends, were doubling upon investments, and in three-years time we are going to have a much better company, stated angus tweedie, an analyst at citi.

Despite numerous business projections, mr klleniusis adamant the proceed to electric automobiles won't destroy daimlers place when you look at the automobile economy, and that business find yourself with at the least the exact same healthier margins it's previously.

Now comes the heavy lifting, the transformation of the car business, he stated. thats a thing that will probably be with us with this whole decade.

Additional reporting by peter campbell in london