Structural Change

Divisiveness at Daimler

Daimler AG Media Night Ahead Of The IAA Frankfurt Automobile Show
Keep your eyes on the road and all nine hands on the wheel! Source: Daimler AG

A decade after it offloaded Chrysler, German auto group Daimler is embarking on its next big reorganization by moving to create separate legal entities for its Mercedes-Benz cars and Daimler Trucks divisions, the company said on Monday.

Daimler wants to create a more agile structure to cope with mounting competition from the likes of Tesla and Uber in electric drive technology and self-driving cars, said Daimler executives.

“Whoever aims for sustainable competitiveness and profitability must continuously evolve and adapt to rapidly changing surroundings,” said Chief Executive Dieter Zetsche.

If the plan is implemented as expected, the car and truck divisions would become standalone companies capable of independently deciding whether to obtain funds via the stock market or with partners, freeing them to more easily make the large-scale investments needed to develop new technologies.

To help win support for the revamp from worker representatives, Daimler pledged to invest some €35 billion ($41.3 billion) in its German plants by 2025 and gave its 130,000-strong workforce job guarantees up to 2030. It also enlarged its pension fund by €3 billion.

While the plans have yet to be set into stone, there’s little doubt at Daimler that investors will be asked to vote on the reshaping plan at the annual shareholders meeting in 2019. The company will conduct a feasibility study of the plan over the coming months.

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