German automotive conglomerate Daimler announced plans to officially split up its Mercedes-Benz luxury car and commercial truck businesses sometime before the end of the year. The firm responsible for building and selling luxury consumer road cars will, from then on, be known simply as Mercedes-Benz, while the truck company will be called Daimler Truck.
According to Automotive News Europe, the move is in response to investors who reportedly pushed for it for a long time. Shareholders hope the split and subsequently more focused, separate firms will result in a higher valuation. And those aspirations are not without merit. Building and selling A-Classes to hipsters or S-Classes to rich folks is a very different proposition to building and selling fleets of freight trucks to corporations.
“Mercedes-Benz Cars & Vans and Daimler Trucks & Buses are different businesses with specific customer groups, technology paths and capital needs,” said Daimler and Mercedes-Benz chairman Ola Källenius in a press release. “Both companies operate in industries that are facing major technological and structural changes. Given this context, we believe they will be able to operate most effectively as independent entities, equipped with strong net liquidity and free from the constraints of a conglomerate structure.”
Via Bloomberg, Daimler’s share price went up almost 9 percent on Wednesday when this news was first announced.
“We have confidence in the financial and operational strength of our two vehicle divisions. And we are convinced that independent management and governance will allow them to operate even faster, invest more ambitiously, target growth and cooperation, and thus be significantly more agile and competitive,” Källenius added.
What exactly this mean for the cars Mercedes will be producing in the future is currently unclear, but we do know one thing: once this separation is said and done, the word “Daimler” will no longer be an accurate shorthand for Mercedes-Benz, the luxury car company.
Got a tip? Send us a note: tips@thedrive.com