Daimler is taking steps to transform its Mercedes and Daimler Truck units into legally independent entities, a move that has some observers wondering if the parent company may be preparing to break up.
For its part, Daimler said Monday that the new structure will turn the two units into more entrepreneurial operations at a time when they need to be more flexible to respond to a fast-changing world.
Mercedes itself is restructuring its various automotive brands to reflect the evolving auto industry, and the truck unit is exploring various new technologies, including electrification and autonomous driving.
“Whoever aims for sustainable competitiveness and profitability must continuously evolve and adapt to rapidly changing surroundings – technologically, culturally and also structurally,” Daimler CEO Dieter Zetsche said in a statement released Monday.
(Daimler investing $1B to electrify SUV family. For the story, Click Here.)
“We are following a straight-forward strategy and have decided to examine a new divisional structure for our company against this backdrop, to make sure we are optimally prepared for the challenges in the new automotive era.”
The German maker said it will spend 100 million euros, or about $118 million, in order to facilitate the new structure. Separately, the Daimler board approved an agreement with its German labor union that will extend job guarantees through the end of 2029 and provide 3 billion euros to the group’s pension fund.
CEO Zetsche first started outlining the new structure in July, and that has prompted speculation that a formal break-up is in the works for the company formed after the failure of DaimlerChrysler AG a decade ago. One possible reason for the move would be to raise capital that could be used to fund all the technologies both the car and truck units will need going forward.
A report by Evercore ISI estimated the two operations would be valued much more highly as standalone ventures, trucks and buses alone likely to carry a market value of 31 billion euros.
(Click Here for details about Mercedes 83 models available in the U.S.)
The truck unit currently operates under a variety of different umbrellas, including its flagship German truck brand, U.S.-based Freightliner and Western Star, as well as FUSO and the Thomas Built school bus brand based in High Point, North Carolina.
The new 2018 Mercedes-Benz S-Class underscores some of the challenges the automaker – like its competitors – will face. The big sedan is loaded with an array of intelligent features capable of driving hands-free under some circumstances.
A plug-in hybrid version is set to debut next year. And Mercedes is getting ready to launch a new sub-brand, dubbed Mercedes-EQ, that will focus specifically on battery-electric models.
For now, however, Daimler is saying there are no plans for a breakup. The new structure meanwhile requires approval at a number of levels and wouldn’t be put in place until the company’s annual shareholders meeting next year.
(To see more about the plans to split Mercedes-Benz into three units, Click Here.)
Management appears confident it will win approval. “We are creating the conditions for greater customer and market focus and therefore more growth opportunities,” said Bodo Uebber, member of the Daimler Board of Management responsible for Finance & Controlling and Daimler Financial Services. “Not only our customers and investors, but above all our employees would benefit from that.”