STOCKHOLDER MEETING

Daimler’s Bright Future Shadowed by Diesel Suspicions

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Daimler CEO Dieter Zetsche talked up the 10 new electric vehicles in the pipeline at the annual stockholders meeting. Photo source: Reuters.

When chief executives speak at a shareholders’ meetings, it feels a little like a state of the nation address by a country’s leader. And that is exactly how Daimler Chief Executive Dieter Zetsche saw his half-hour speech in front of approximately 6,000 Daimler shareholders in the CityCube expo center in Berlin.

In a suit (but no tie) rather than his usual jeans and sneakers, he stood before the company’s shareholders: “We have never been so successful as today,” Mr. Zetsche said, pointing to the company’s strong balance sheet. At €3.5 billion ($3.77 billion), Daimler will pay out the highest dividend of blue-chip DAX companies for 2016.

Mr. Zetsche used that strong performance to promote his future agenda. The company plans to launch more than 10 electric cars by 2022 under the name “EQ.” However, this initiative will come at a cost of at least €10 billion and is expected to significantly impact the group’s financial strength in the coming years.

Last year alone, Daimler increased its development expenditure by 15 percent to €7 billion, half of which went into “green technologies”

“It is understandable that deviations between laboratory and road values lead to many questions. Clear and transparent rules and more realistic test procedures are all the more important”

Dieter Zetsche, Daimler CEO

That’s because Daimler isn’t planning just cars, but rather an “entire ecosystem” for mobility. This includes car sharing as well as self-driving vehicles with the “sensible use of artificial intelligence,” Mr. Zetsche said. To this end, Daimler itself is being rebuilt. “In my entire career, I have never experienced such a strong willingness to change at Daimler,” said Mr. Zetsche, who has worked for the company for more than 40 years.

Mr. Zetsche’s optimistic enthusiasm is clouded by persistent scandals that threaten to undo good financial results. Last week, the Stuttgart public prosecutor’s office said it was investigating unnamed Daimler employees on suspicion of fraud and criminal false advertising related to diesel engines.

“Of course we are cooperating fully with the authorities,” Mr. Zetsche said in his speech. “Neither the Federal Motor Transport Authority nor the ministry of transport have found any breach of applicable law in the course of their measurements of our vehicles.”

Nevertheless, he added, “it is understandable that deviations between laboratory and road values lead to many questions. Clear and transparent rules and more realistic test procedures are all the more important.”

 

Markus Fasse is a Handelsblatt correspondent in Munich, currently specializing in aviation and automobile industry news. To contact the author: fasse@handelsblatt.com

 

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