Daimler’s restructuring plan is announced On February 3rd 2021, according to its press release, Daimler announced that the German automotive giant agreed to evaluate a spin-off of its Truck and […]
On February 3rd 2021, according to its press release, Daimler announced that the German automotive giant agreed to evaluate a spin-off of its Truck and Bus business. It also begins preparations for a separate listing of Daimler Truck. In addition to this, Daimler shared the intention to rename itself as Mercedes-Benz at the appropriate time. Therefore, it means that Daimler will split Daimler’s industrial businesses and establish two independent pure-play companies. They will be Mercedes-Benz Cars & Vans and Daimler Trucks & Buses, respectively.
When it comes to Daimler’s decision, we can see three key indications in the automotive industry.
First, Daimler’s decision is strongly related to the concept “from volume to value”. It is also key strategy in French rival automotive manufacturer, Renault. In “mass production mass consumption” era, it is easy for manufacturers to seek for the volume of production. This is because the more automotive makers produce, the more they can sell.
However, due to several reasons such as the change of consumer preference, the global recession and others, automotive manufacturers face really tough challenges to meet shareholder’s requirements as well as to earn profit. As a result, some companies do not follow the number of sales. Renault is an example, and General Motors withdrew in European market. Daimler follows this trend as well.
Second, electrification is unavoidable. In other words, it seems impossible to win the competition without electrification. This is because many countries such the UK and Japan and many regions have already set their new policy to ban new sales of combustion engine cars. We can easily imagine that automotive makers will not be able to survive without electric vehicles. The problem here is the cost of Research and Development.
Therefore, this announcement makes sense since Mercedes-Benz Cars & Vans can focus on EVs and the decision leads to sustainability. As we see the other article, Daimler’s decision will make the company financing more, so Mercedes-Benz might invest in Research and Development easier. In addition to this, Mercedes-Benz will be able to focus on high-end segment as well. In high-end segment, expected margin is high and customers pay more money for updated software services. The brand value of Mercedes-Benz is really high and the decision possibly enables the company to earn revenue and profit more.
Third, when it comes to autonomous driving, trucks may be suitable for the new technology than commercial vehicles are. This is because trucks are used for simpler routes than commercial cars are. When we realize autonomous driving, vehicles have to deal with unexpected situations and conditions such as weather, pedestrians and other vehicles. However, this is truly difficult and it takes more time to realize autonomous driving. Trucks often go through high ways, and there are fewer variants in terms of uncertainty than in city roads. Thanks to the announcement, Daimler Trucks & Buses will be able to focus on autonomous driving more.
