Dana initiates cost-cutting strategy aimed at slashing $200 million yearly expenses by 2026
Dana, a leading drivetrain and automotive specialist, has unveiled a significant transformation plan aimed at navigating the challenging landscape of the automobile industry. The plan includes the sale of its off-highway business and a reduction of $200 million in annual expenses by 2026.
Keith Wandell, the lead independent director of Dana's board, highlighted the transformation in the automobile industry, characterised by protracted cost pressures and demand uncertainty. This transformation is echoed by Bain & Co, who emphasised in a September report that the automobile supply industry is vulnerable to volume fluctuations.
The sale of the off-highway business will enable Dana to focus on its light-duty and commercial segments. While no timeline for the sale has been provided, the move aims to strengthen Dana's balance sheet and return capital to shareholders.
In a bid to further reduce costs, Dana's cost-reduction strategy includes slashing capital spending to reflect the revised market demand for electric vehicles. This strategy applies to the segments that manufacture traditional and electrified products, which are largely shared across the remaining portfolio.
Bruce McDonald, a board member at Dana, will lead the company as interim CEO. McDonald will also remain on the board once a new CEO is named. The search for a permanent CEO has been initiated, with an executive search firm retained to assist in the process.
James Kamsickas, the current CEO of Dana, is retiring and will be replaced by McDonald. Kamsickas will continue in an advisory role with the company through March 2025.
The automobile supply industry, according to Bain & Co, is less flexible to respond to a volatile auto market. This underscores the necessity for companies like Dana to adapt and streamline their operations in response to the industry's challenges.
The exact name of the interim CEO replacing Dana White at Dana has not been disclosed in the search results. Nonetheless, the transformation plan, under the leadership of Bruce McDonald, promises to steer Dana towards a more resilient and competitive future.
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