Mercedes Could Become Its Own Company As Daimler Splits Itself Up

5 years, 3 months ago - 19 October 2017, carbuzz
Mercedes Could Become Its Own Company As Daimler Splits Itself Up
The bigger question: how will this affect Mercedes' future?

Observe the German soccer team's style of play and one can quickly derive how its culture of "all for one and one for all" leads to play that values the outcome of the team rather than the individual star. The German auto industry also adheres to that model, forming large automotive groups that balloon to sizable proportions and spread success around the group. Unfortunately, the colony mentality doesn't always bode well when transitioning into the future.

With the tall order of ushering in an era of producing autonomous electric cars, Daimler, Mercedes-Benz's parent company, is planning to split into three separate companies in order to become flexible enough to adapt to the industry wide changes on the horizon. Reuters claims that the auto giant has set aside over €100 million Euros ($118 million) for the split, which will form three separate legal entities out of the current group. One group will be Daimler Financial Services. Another will encapsulate Mercedes' commercial Trucks and Buses division while the third entity will take care of Mercedes-Benz Cars and Vans, the division we know and love most.

Mercedes wants stockholders not to worry about the changes this will cause and assures us it's making the move only so that it can more quickly respond to changes in the market and in customer demand. "We not only need to be as close as possible to our customers' pulse, but also to be able to react as quickly and flexibly as possible to market developments and a fundamentally changing competitive environment," said finance chief Bodo Uebber. These comments run counter to past rumors that claimed Mercedes was looking to divest some of its assets to fund investments in self-driving technology and alternative forms of propulsion.

To ensure workers aren't worried about job security, Mercedes has extended guarantees of employment good until 2029, up from a previous guarantee that expired in 2020. Analysts aren't totally against the move, with some claiming that the three companies can attain a higher combined valuation than when under a single roof. However, analysts also state that the implications of the break-up will be felt in the future rather than in the short-term. "Daimler may be against putting anything up for sale now but of course things can look entirely different in 10 to 15 years' time," said NordLB analyst Frank Schwope. If the separation is approved, then Daimler could become three separate entities as early as 2019. Let's hope for the best.

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