Daimler AG is taking steps to create separate legal entities for its Mercedes-Benz Cars division and its truckmaking operations, breaking up its conglomerate structure as the auto industry grapples with disruption from a shift to self-driving electric vehicles.
Under the plan, the German automotive giant would be transformed into a holding company for three units: Mercedes-Cars & Vans, Daimler Trucks & Buses and the financial services unit, which is already legally independent, the Stuttgart, Germany-based company said Monday in a statement.
While the plan is aimed at giving “greater entrepreneurial responsibility” to the units, it will initially create additional costs with Daimler budgeting more than 100 million euros ($118.06 million) for the first steps. The company said it doesn’t plan to divest any divisions.
The overhaul would be Daimler’s largest since the sale of its former Chrysler unit 10 years ago. Valuations of global auto manufacturers have been squeezed as the industry faces a massive changeover to battery-powered models, while traditional car ownership is challenged by new services such as ride hailing. The sweeping industrywide makeover has sparked calls from analysts and investors to weed out convoluted structures to unlock value.
“Whoever aims for sustainable competitiveness and profitability must continuously evolve and adapt to rapidly changing surroundings — technologically, culturally and also structurally,” CEO Dieter Zetsche said in the statement.
Any reorganization requires approval by the supervisory board as well as consultation with employee representatives, Daimler said. Shareholders might vote on any change in 2019 at the earliest, the company said.
By Tom Lavell