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Section Daimler AG: why cars and trucks ″Mercedes″ parted | Analysis of events in political life and society in Germany | DW

The German automaker Daimler AG ceased to exist in its current form. An extraordinary virtual meeting of its shareholders voted almost unanimously on October 1, 2021 to spin off the truck and bus division into an independent joint stock company. Thus, a company with more than 135 years of history was divided into two independent companies. And both will produce “Mercedes”.

The German DAX index will include two Mercedes manufacturers

One was named Daimler Truck Holding AG, having become the world’s largest manufacturer of trucks, placed its shares on the Frankfurt Stock Exchange on December 10, 2021, and in the spring, most likely, will be included in the main German stock index DAX 40. The other will retain the production of cars and minivans with a Mercedes star, by February 1, 2022 it will be renamed from Daimler AG to Mercedes-Benz Group AG and retain its place in this index.

Factory 56: new Mercedes S-Class passenger car plant in Sindelfingen

“Factory 56”: new plant for the production of Mercedes S-class cars in Sindelfingen

The unbundling of the concern took place according to the following scheme: the shareholders of Daimler AG received one Daimler Truck Holding AG security for every two shares. As a result, they became the owners of 65% of the capital of the new company, but at the same time they continue to own the old one. The future Mercedes-Benz Group AG will retain 35% of the shares of the newly formed company and will be, although a minority, but still its largest shareholder.

Such a scheme is beneficial to shareholders, since the total value of the two separate parts will exceed the current market capitalization of a single concern, no doubt a well-known German automotive expert, director of the Duisburg Research Institute CAR (CAR-Center Automotive Research), Professor Ferdinand Dudenhöffer (Ferdinand Dudenhöffer).

Volvo and Volkswagen also split the production of cars and trucks

The partition plan for Daimler AG has been in development for a long time. At the same time, the concern’s headquarters in Stuttgart probably took into account the experience of two similar downsizing in the European auto industry. In 1999, the Swedish company Volvo sold its passenger car division, keeping the truck business.

Chairman of the Board of Daimler AG and Head of the Passenger Car Division Ola Kallenius

Chairman of the Board of Daimler AG and Head of the Passenger Car Division Ola Kallenius

In 2018, the German concern Volkswagen spun off into a separate listed company called Traton Group its division for the production of trucks and buses with the brands MAN and Scania, and he focused on the production of cars. However, Volkswagen retained an 89.72% stake in Traton and thus retained full control of the new company. Daimler AG decided to give the spun-off company much more independence.

Justifying to the shareholders the division of the concern into two parts, the chairman of the board of Daimler AG and the head car divisions Ola Kallenius (Ola Källenius) stressed that the production of cars and trucks are still two completely different directions in the automotive industry: “Different customers, different business model, different framework conditions.”

Decisive factors: transition to electric motors, hydrogen and autonomous driving

And now, with the accelerated transition of the global automotive industry to alternative engines, technological differences will increase, Ola Kallenius believes: “In passenger cars, the battery is in the center of attention, in trucks, fuel cells also play an important role.” In other words, for the former, the main path of development is electric motors, while trucks have both electric and hydrogen engines. Therefore, the head of Daimler AG stressed, “we have different paths to the future.”

Daimler truck autonomous driving test in real conditions in 2015

Daimler began testing autonomous truck driving in real conditions in 2015

Professor Dudenhöffer is sure that autonomous driving has become another topic that accelerated the decision to split the group. In his opinion, for trucks, the introduction of unmanned technologies is even more important than for cars. “The cargo division needs to be transformed much faster, and if a single concern is preserved, there would be a danger that the passenger car division would slow it down in solving the most important tasks,” the expert told n-tv. He believes that at Daimler AG, truck production has been somewhat relegated to the background.

A slightly different opinion is shared by Janne Werning, an analyst at the German investment company Union Investment. Until now, he said in an interview with Reuters, “the truck division with its weak results could hide behind the back of a single concern.” Now, after entering the stock exchange, shareholders, analysts and potential investors will more closely observe the company that has gained independence. And the dynamics of the price of its shares will inevitably “discipline” the management of the new company, the expert believes: “Daimler Truck will now be directly compared with Scania and Volvo Truck, whose profit margins are much higher.”

Daimler and KAMAZ joint venture face tougher requirements

So all subsidiaries of the new independent truck and bus manufacturer will have to improve their financial performance, including Mercedes-Benz (Germany), Freightliner (USA), Mitsubishi Fuso (Japan), BharatBenz (India). It can be assumed that more stringent requirements regarding profitability will also be imposed on the Daimler Kamaz Rus joint venture in Russia.

Daimler truck and bus plant in Chennai, India

Daimler truck and bus plant in Chennai, India

The joint venture in Naberezhnye Chelny, in which Daimler AG and KAMAZ each own 50%, was established in 2009 and a year later launched the production of Mercedes-Benz trucks using the SKD method. Then the production of Fuso trucks was launched, and in 2019 a second plant producing cab frames was commissioned.

In total, over the past decade, the DAIMLER KAMAZ RUS joint venture has produced, according to information on its website, over 30,000 trucks and by the end of 2020 had 850 employees. By comparison, in 2019, before the pandemic, Daimler AG’s cargo division produced over 500,000 trucks and buses worldwide and had around 100,000 employees.

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