German automotive giant Daimler’s cars & vans, and trucks & buses could become legally independent entities by 2019. The management board has proposed for the creation of the independent structure to take greater entrepreneurial responsibility. 

This move is intended towards strengthening the future viability of the business units and better utilise the potential for growth and earnings in the various markets. As per the press communication, Daimler says safeguarding its future will be based on three pillars: protecting and increasing the company's success, pushing forward with shaping the future for the employees, and ensuring the long-term commitment of investors.

The company undertook a feasibility study which showed positive results respond to it the Board of Management has decided today on subject to the approval of the Supervisory Board, to continue with the project and in this context to take preparatory measures. It will also invest a three-digit million euro amount for these first steps. 

It says close consultation is already taking place with the employee representatives; an agreement has been reached on the cornerstones of a balance of interests to secure Daimler's employees' future. That includes major elements like the extension of the agreement on safeguarding employment until the end of 2029 ("Zukunftssicherung 2030"), increasing the funded status of pension obligations and an extension of the common profit-sharing bonus of Daimler. 

Commenting on the proposal, Dr Dieter Zetsche, chairman, Board of Management Daimler and head of Mercedes-Benz cars, says, "Daimler is today facing an exceptional challenge: On the one hand, we are more successful than ever before; on the other hand, our business is changing like never before." 

He further states, "Whoever aims for sustainable competitiveness and profitability must continuously evolve and adapt to rapidly changing surroundings – technologically, culturally and also structurally. We are following a straight-forward strategy and have decided to examine a new divisional structure for our company against this backdrop, to make sure we are optimally prepared for the challenges in the new automotive era." 

As per the proposed implementation the new structure under roof and lead of Daimler AG will consist of three independent entities – Mercedes-Benz Cars & Vans, Daimler Trucks & Buses as two new entities, and the existing legally independent Daimler Financial Services AG. The three entities would continue to have their registered offices in Germany, along with no plans to divest any of its divisions. 

"We want to secure Daimler's future from a position of strength. For that reason, we not only need to be as close as possible to our customers' pulse, but also to be able to react as quickly and flexible as possible to market developments and a fundamentally changing competitive environment," explains, Bodo Uebber, member of the Daimler Board of Management responsible for Finance & Controlling and Daimler Financial Services. "With this project, we are creating the conditions for greater customer and market focus and therefore more growth opportunities. Not only our customers and investors, but above all our employees would benefit from that. We are cooperating with the employee representatives at all levels." 

Under the proposal the Daimler will act as a parent company with the two new entities created that will have its own entrepreneurial responsibility and high value added potential, and so being prepared with even more market and customer focus for the challenges in the new automotive era. It also says that it will ensure that the synergies would remain unchanged, and the Group will not pursue any savings or efficiency programs or the intention to cut jobs. 

With this planned exercise, Daimler claims it will enable focused cooperation and partnerships, secure necessary investments in technological transformation and digitisation, and address the changed customer behaviour and market volatility. 

Till now, the board of management nor the supervisory board of Daimler have reached a final decision on implementing the new structure for the Daimler Group. And, both boards will come to a final resolution after the ongoing assessments and negotiations have been completed, such as tax-related issues or a comprehensive due diligence. Should the Board of Management and Supervisory Board decide to finally implement the new Group structure, those measures would require the approval of a shareholders' meeting of Daimler. Such a motion could be voted on at the earliest at a shareholders' meeting in the year 2019.