Daimler to restructure automotive business as it issues airbag recall

17 October 2017

Daimler to restructure automotive business as it issues airbag recall

17 October 2017

German vehicle manufacturer Daimler has announced a restructuring program, designed to unlock value in separate areas of its business while also preparing it for an electric, connected and autonomous future.

Currently the company runs its financial services division as a legally separate entity. However, it now plans to make its Mercedes-Benz Cars and Vans, and its Daimler Trucks and Buses divisions into independent businesses as well, allowing them to take what the company calls ‘greater entrepreneurial responsibility’ for themselves.

In a statement, the company says: ‘This project intends to strengthen the future viability of the business units and better utilise the potential for growth and earnings in the various markets. Safeguarding Daimler’s future is 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 is planning to invest over €100 million into the new entities, which would give it the potential to react more quickly as the industry moves forward with electric vehicles (EVs), self-driving cars and connected technology.

‘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,’ stated Dieter Zetsche, chairman of the board of management of Daimler AG and head of Mercedes-Benz Cars. ‘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.’

With the possible implementation of a new structure under the roof and lead of Daimler AG, there would be three independent entities: Mercedes-Benz Cars and Vans, and Daimler Trucks and 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. Daimler AG does not plan to divest any of its divisions.

The plans still need to be discussed with workers unions, however once agreed, they could be implemented as early as 2019. The plans could achieve similar results as those floated by Fiat Chrysler CEO Sergio Marchionne to spin-out Alfa Romeo and Maserati, unlocking value for the car maker.

Meanwhile, the manufacturer has been forced to recall around 1 million cars due to defects with the airbag and steering columns. The models affected include the A, B, C, and E-Class, and CLA, GLA, and GLC, built between November 2011 and July 2017.

A Mercedes-Benz spokeswoman said: ‘If the steering column module clock spring is broken, the driver airbag warning light will be displayed in the instrument cluster, as well as a red airbag warning lamp.

‘In rare circumstances, if the clock spring is broken and the wiring components are not sufficiently earthed, this could lead to an electrostatic discharge which could inadvertently deploy the driver’s airbag.’

The recall is not as severe as those involved in the Takata scandal, which has seen a number of fatalities and over 30 million vehicles recalled, while the company itself has faced financial ruin as a result.

Photograph courtesy of Daimler