Daimler Is Splitting Itself Apart

Parent company of Mercedes-Benz, Daimler, has announced the decision to split itself up into three independent companies. Let's have a look at the how and why.
Jason Snyman
2018-08-03

A while ago, it was announced that German powerhouses Daimler and BMW had agreed to merge their mobility operations into one distinct business in order to stick it to Uber. Now , we have some different news, and nobody is quite sure what it means for the merge.

Parent company of Mercedes-Benz, Daimler, has announced the decision to split itself up into three independent companies. The giant automaker listed the need to make itself fit for the future and keep pace with the tech industry as the primary reasons behind the decision. 

The three companies will essentially focus on Mercedes-Benz, Trucks and Mobility. So, perhaps we'll still get that dream partnership we've all been hoping for. 

Project Future

Dubbed PROJECT FUTURE, the company restructuring will result in Mercedes-Benz, Daimler's truck division and Daimler's mobility division all becoming their own independent entities. Chances are that the changes will only come into effect in January 2020, but this is basically what it entails: 

• Mercedes-Benz cars and vans will all belong to Mercedes-Benz AG.

• Commercial truck and bus operations will all be rolled into Daimler Truck AG.

• The financial services division will merge with the mobility operation to become Daimler Mobility AG.

• All three companies will still belong to Daimler AG.

The idea is that by splitting these three different pursuits into their own companies, Daimler hopes to create more entrepreneurial freedom, stronger market / customer focus and the ability to enter into faster, more flexible partnerships. 

It's a smart move in the long run, no matter how the stock market reacts right now. Not only could the splitting of Daimler aid in luring in new and exciting talent, but it would make each individual company attractive to different investors as well. Investors who would want to know exactly where their money is going to be used. If the investor has no real interest in trucks, but is interested in mobility plays, for example, this split allows for that clearer option. And, needless to say, it allows for each company to sink or swim based upon its own merit – instead of burdening the entire brand as a whole. 

Daimler – Big In China

Global automakers are now facing bigger responsibilities than ever before. They have an unprecedented responsibility to the customer, the shareholders and more noticeably – the environment. 

The types of decisions being made by Daimler, and others, may be a sign that yes – the industry is willing to adapt and change on a deeper level than ever before. Of course, it isn't going to please everybody, but the gloom prophets will no doubt come around sooner or later.

We recently wrote about Geely, the Chinese automaker which also owns Volvo, becoming the largest single shareholder in Daimler. The initial response is certainly – Mercedes-Benz? Made In China? Followed by something akin to a panic attack. And that's perfectly reasonable. But, there are a number of good reasons for this.

The Chinese government has piled an immense amount of pressure onto the automotive industry to ensure the lowering – and eventual eradication – of fossil fuel emissions in the next couple of years. Cars need to go electric, and Geely needed access to Mercedes-Benz technology in order to achieve this goal as soon as possible.

The German giant, Daimler, in partnership with Chinese-owned automaker BAIC, is currently one of the biggest producers of vehicles in China, and of course, it isn't the only company looking to shake things up.

We've recently seen Waymo partner with Jaguar to build self-driving electric vehicles, following GMs investment in Lyft to do the same. 

American car manufacturer, Ford, has also gotten on board. Previously, we've seen the birth of Ford Smart Mobility LLC – a company focused on tech services such as bike and ride-sharing. The company partnered with Chinese Zotye to develop ride-hailing services in China. 

Last week, the company launched a new entity called Ford Autonomous Vehicles LLC and announced further plans to restructure its entire global business model. 

Embracing The Future

The auto industry is evolving at breakneck speed, whether by choice or necessity. We've seen this with the growing demand for fully electric and hybrid vehicles all across the globe, with companies such as Tesla, Nissan and BMW paving the way. 

Over the last couple of years, we've seen the rise of new and exciting business models, such as the ride-hailing and ride-sharing services, Uber or Taxify. These companies have all but annihilated the traditional meter-taxi business, and even more upstarts continue to innovate and push the industry onward into different directions. 

In a few years, we may even witness a complete shift in car ownership as a whole, as more and more people opt for different models. 

Even the autonomous (self-driving) cars – which everybody seems to be working on – are beginning to gain a bit of traction. While most of us still don't trust them, we're nevertheless interested in what could happen, and this is all thanks to the work being done in Silicon Valley.

Daimler will need to follow suit in order to better compete.