German vehicle manufacturer Daimler says it plans a fundamental change in its structure, “designed to unlock the full potential of its businesses in a zero-emissions, software-driven future”. 

The supervisory board and the board of management of Daimler says they have agreed to evaluate a spin-off of its truck and bus business, and to begin preparations for a separate listing of Daimler Truck. 

The Daimler Truck business will have independent management, standalone corporate governance, including an independent chairperson of the supervisory board, and is targeted to qualify as a DAX company. 

The DAX is a blue-chip stock market index consisting of the 30 major German companies trading on the Frankfurt Stock Exchange.

The transaction and the listing of Daimler Truck on the Frankfurt exchange is expected to be complete before the end of the year. 

In addition, it is also Daimler’s intention to rename itself as Mercedes-Benz “at the appropriate time”.

Two Independent Companies 
“This is a historic moment for Daimler. It represents the start of a profound reshaping of the company,” says Ola Källenius, chairperson of the board of management of Daimler and Mercedes-Benz.

“Mercedes-Benz Cars & Vans and Daimler Trucks & Buses are different businesses with specific customer groups, technology paths and capital needs. 

“Mercedes-Benz is the world’s most valuable luxury car brand, offering the most desirable cars to discerning customers. 

“Daimler Truck supplies industry leading transportation solutions and services to customers. 

“Both companies operate in industries that are facing major technological and structural changes,” notes Källenius.

“Given this context, we believe they will be able to operate most effectively as independent entities, equipped with strong net liquidity and free from the constraints of a conglomerate structure.”

As part of a more focused corporate structure, plans are afoot for both Mercedes-Benz and Daimler Truck to be supported by dedicated captive financial and mobility service entities, with tailor-made financing, leasing and mobility solutions. 

“We have confidence in the financial and operational strength of our two vehicle divisions,” says Källenius.

“And we are convinced that independent management and governance will allow them to operate even faster, invest more ambitiously, and target growth and cooperation, and, thus, be significantly more agile and competitive.”

Reuters reports that Daimler management told analysts that one reason for splitting the businesses is that commercial trucks and luxury cars are pursuing different approaches to slashing carbon emissions.

Heavy truck makers are investing more in hydrogen fuel cell technology to replace internal combustion engines. Luxury vehicle makers are focused on batteries.

Analysts believe the break-up is logical and the truck business does not add to Daimler’s share price.

A split will also provide Mercedes-Benz cars the opportunity to challenge Tesla.

Daimler Truck to Accelerate New Technologies
Daimler Truck intends to generate value for its shareholders by accelerating the execution of its strategic plans, raising its profitability and driving forward with its development of emissions-free technologies for trucks and buses. 

“This is a pivotal moment for Daimler Truck,” says Martin Daum, member of the board of management of Daimler and chairperson of the board of management of Daimler Truck.

“With independence comes greater opportunity, greater visibility and transparency. 

“We will grow further and continue our leadership in alternative powertrains and automation. 

“We have already defined the future of our business with battery-electric and fuel-cell trucks, as well as strong positions in autonomous driving. 

“With targeted partnerships we will accelerate the development of key technologies to bring best-in-class products to our customers rapidly.”

“Daimler Truck already has a solid financial basis, and our business model is robust,” says Daum.

“We will continue to work on our cash flow management and we know how to deal with industry market cycles – we have proven that again in the significant Covid-related global market reduction. 

“We have clear strategies to raise our financial performance and accelerate our execution. 

“We will use our strong and well-known global brands, our scale and our exceptional technology to deliver industry-leading returns.”

An innovation fund €1.5-billion will also be established for Daimler Truck. 

Daimler Truck is the world’s largest truck and bus producer. 

With more than 100 000 employees, it has seven brands under one roof: BharatBenz, Freightliner, Fuso, Mercedes-Benz, Setra, Thomas Built Buses and Western Star. 

In 2019, a total of around half-a-million trucks and buses were delivered to customers. 

What Will Happen in South Africa?
Daimler operates in South Africa as Mercedes-Benz South Africa (MBSA) with both the car and truck businesses active in the domestic market.

The passenger car division and Daimler Trucks and Buses Southern Africa operate from the same headquarters in Pretoria, while the companies also use the same assembly location in East London, in the Eastern Cape, where both C-Class passenger vehicles and a variety of trucks are built.

How the separation of Daimler’s car and trucks businesses will influence local operations is not yet clear.

“As Daimler has just kicked off the plans for a separate stock listing of Daimler Truck, the details still have to be analysed. As the project progresses, we’ll keep [the market] up to date,” says a spokesperson for MBSA.