Daimler play catch-up

German car producer Daimler announced ambitious plans to increase its profit in the medium term, managers said during the company's annual general meeting on Wednesday.

"Wherever we are engaged, we want to work ourselves to the very top," Daimler Chief Executive Dieter Zetsche said "Where we aren't number one right now, we aspire to become the leader of the field."

Zetsche recalled that Daimler last year sold 2.1 million vehicles worldwide - more than ever before in the firm's 125-year history. In the first quarter of the current year, the company was able to keep up the momentum by increasing sales by 12 percent to 340,000 units.

Daimler said it was aiming to set new record in 2012, fueled by expectations that sales in China, the world's biggest car market, would continue to grow. Zetsche also pinned great hopes on India where his company would inaugurate a production facility in two weeks.

Strategic investment

Daimler announced on Wednesday that it would invest 10.9 billion euros ($14.35 billion) in research and development over the next two years. Another 10.6 billion euros will be put into expanding production facilities.

"With regard to medium-term and long-term effects, it'll be money well spent," Zetsche said in a statement.

The investment is also meant to increase long-term profitability, which appears to low for Daimler's main shareholders such as the Union Investment company. "Shareholders are happy about decent dividends," Fund Manager Ingo Speich told Reuters news agency. "But it's still true that BMW and Audi are the measure of all things in the premium car segment, and not Mercedes.".

Daimler offshoot Mercedes-Benz is hoping to regain lost ground by focusing on innovative and environmentally friendly vehicles. The company announced its hybrid E Class cars will go on sale in both sedan and station wagon versions from this fall. It described the cars as the most economical luxury-class vehicles in the world.

hg/sms (Reuters, dpa, AP)