Daimler AG will carve itself into three separate units in its biggest overhaul in a decade as the Mercedes-Benz car and truck maker seeks to adapt to the unprecedented shift to self-driving and electric vehicles.
The need for change was evident in the German manufacturer’s second-quarter figures that showed another slump in earnings following on from the first three months of the year. Daimler warned that trade barriers, new European emissions tests and pricing pressure will weigh in the coming months.
The recent supervisory board approval takes forward a plan, in the works since last year, to establish three largely independent units to allow cars, trucks and mobility services to react faster to changing customer demands and fend off new rivals like Uber Technologies Inc. The move needs approval from shareholders, set for May. It could pave the way for spinoffs or other deals, such as a separate partial listing of its trucks unit.
The company reiterated that it has no plans for divestments.
“The new structure positions Daimler to tackle the rapid pace of change in the mobility sector and the corresponding strategic challenges,” Chairman Manfred Bischoff said.
Daimler highlighted a disparate set of pressures on the company. These included higher spending on technology, a fire at a supplier interrupting production at its US plant and consumers in China asking for price cuts even before a reduction in import duties.
As a result, the manufacturer warned that lower second-quarter earnings at Mercedes-Benz passenger cars would extend into the current period. Fiat Chrysler said Chinese customers had held off from buying its luxury Maserati models ahead of lower duties.
Daimler said challenges for the Mercedes division will ease towards the end of the year.
In an unexpected boost for Daimler and other European carmakers, President Donald Trump and European Commission President Jean-Claude Juncker agreed to suspend new tariffs while negotiating lower barriers to transatlantic commerce.
Daimler ships more than half of its Mercedes and Smart city cars it sells in the US from the EU. Trump had threatened to slap import tariffs of 20 percent on vehicle imports, up from
Daimler is exploring options for possible production shifts to manage higher import duties, CEO Dieter Zetsche said. This could include assembly of cars from knock-down kits in China, he said, though no decision has been made. Daimler, also the world’s biggest commercial vehicles maker, remains under scrutiny over its practices on diesel emission for passenger cars in Europe.