The German auto concern Daimler AG ceases to exist in its current form. An extraordinary virtual meeting of its shareholders almost unanimously voted on October 1, 2021 to spin off the truck and bus division into an independent joint-stock company. Thus, the company with more than 135 years of history is divided into two independent companies. And both will produce Mercedes.
German DAX index to include two Mercedes manufacturers
One will be named Daimler Truck Holding AG, will become the world’s largest manufacturer of trucks, will place its shares on the Frankfurt Stock Exchange in December 2021, and in the spring, most likely, will be included in the main German stock exchange index DAX 40. The other will retain the issue. passenger cars and minivans with a Mercedes star, will be renamed Mercedes-Benz Group AG by February 1, 2022 and will retain its place in this index.
Factory 56: new plant for the production of S-class passenger cars in Sindelfingen
The unbundling of the concern will take place according to the following scheme: the current shareholders of Daimler AG will receive one security from Daimler Truck Holding AG for every two shares. As a result, they will become owners of 65% of the capital of the new company, but they will continue to own the old one. The future Mercedes-Benz Group AG will retain 35% of the shares in the newly formed company and, although a minority, will still be its largest shareholder.
Such a scheme is beneficial to shareholders, since the total cost of the two separate parts will exceed the current market capitalization of a single concern, the famous German automobile expert, director of the CAR-Center Automotive Research, Professor Ferdinand Dudenhöffer, does not doubt.
Volvo and Volkswagen also share production of cars and trucks
Daimler AG’s partition plan has been in the works for a long time. At the same time, the headquarters of the concern in Stuttgart probably took into account the experience of two similar unbundling in the European automobile industry. In 1999, the Swedish company Volvo sold the passenger car division, keeping the production of trucks.
Ola Kallenius, Chairman of the Management Board of Daimler AG and Head of Passenger Cars
In 2018, the German concern Volkswagen spun off its division for the production of trucks and buses with the MAN and Scania brands into a separate exchange company called Traton Group, and itself focused on the production of passenger cars. However, Volkswagen retained 89.72% of Traton’s shares and thus full control over the new company. Daimler AG decided to give the separated company much more independence.
Justifying before the shareholders the division of the concern into two parts, the chairman of the board of Daimler AG and the head of the passenger car division Ola Källenius insisted that the production of cars and trucks are still two completely different directions in the automotive industry: “Other customers, different business model, other framework conditions. “
Decisive factors: switch to electric motors, hydrogen and autonomous driving
And now, with the accelerated transition of the world car industry to alternative engines, technological differences will increase, says Ola Kallenius: “In cars, the focus is on the battery, in trucks, fuel cells also play an important role.” In other words, for the former, the main development path is electric motors, while for trucks it is both electric and hydrogen engines. Therefore, said the head of Daimler AG, “we have different paths to the future.”
Daimler began testing autonomous truck driving in real conditions in 2015
Professor Dudenhöffer is confident that autonomous driving has become another topic that hastened the decision to split the concern. In his opinion, the introduction of unmanned technologies is even more important for trucks than for cars. “The cargo division needs to be transformed much faster, and if the unified concern was 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 overshadowed.
Janne Werning, an analyst at the German investment company Union Investment, has a slightly different opinion. 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.” Henceforth, after entering the stock exchange, shareholders, analysts and potential investors will be more closely watching the independent company. 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, which have significantly higher profit margins.”
A joint venture between Daimler and KAMAZ awaits more stringent requirements
So all subsidiaries of the new independent manufacturer of trucks and buses will have to improve their financial performance, including Mercedes-Benz (Germany), Freightliner (USA), Mitsubishi Fuso (Japan), BharatBenz (India). It can be assumed that stricter profitability requirements will also be imposed on the Daimler Kamaz Rus joint venture in Russia.
Daimler truck and bus plant in the Indian city of Chennai
The joint venture in Naberezhnye Chelny, in which Daimler AG and KAMAZ each own 50%, was created 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 was launched, producing cab frames.
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 about 100,000 employees.
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