Mercedes-Benz South Africa spins-off of Daimler to foster value creation

SOUTH AFRICA – MERCEDES-Benz South Africa’s (MBSA’s) has spined-off Daimler Trucks and Buses Southern Africa (DTBSA) to Daimler Truck AG, a subsidiary of Daimler AG, MBSA’s ultimate parent company, coming at a bleak time for the heavy commercial vehicle business in South Africa.

The decision to spin-off was taken in response to a board and supervisory board strategy by the parent in July 2018, where a plan to simplify the group structure was adopted.

Daimler Truck AG was selling almost 500,000 vehicles globally a year before the Covid-19 pandemic, but heavy commercial vehicle sales have plunged worldwide since then.

The European Union commercial vehicle market shrank 18.9 percent to 1.7 million units in 2020, versus 2019, with sales in Germany down 14.8 percent, said the European Automobile Manufacturers Association.

In the US to end-December 2020, medium and heavy truck sales fell 22.3 percent in 2020 to 409,592 units year to date.

In South Africa, medium and heavy commercial truck sales fell 22.5 and 18.8 percent respectively and motor manufacturers predict another challenging year.

A statement from Mercedes-Benz South Africa posted last week said that the aim of the spin-off was to foster value creation for Daimler AG shareholders and to unlock the potential of the company.

Subsidiary Mercedes-Benz AG will house the cars and vans divisions, Daimler Truck AG the trucks and buses divisions, while Daimler Mobility AG will control Daimler Financial Services AG.

“The aim of the spin-off was to foster value creation for Daimler AG shareholders and to unlock the potential of the company”

“The creation of three strong and independent companies will simplify the corporate structure, provide entrepreneurial freedom for each entity while strengthening its customer focus,” the group said.

DTBSA operates in the local and southern Africa truck and buses markets, including Zambia, Zimbabwe, Namibia, Mozambique, Botswana, Swaziland, and Lesotho, under the Mercedes-Benz trucks, Mercedes-Benz buses, Fuso, and Freightliner (parts & services) brands.

DTBSA also assembles Mercedes-Benz trucks and buses, as well as Fuso trucks from its East London manufacturing plant.

It was established as a new, legal, and standalone entity of Mercedes-Benz South Africa on January 1, 2019.

Daimler AG’s “5C strategy” focuses on five themes to grow the group: to strengthen the core business, confirm its status as an industry leader in new mobility sectors, adapt the corporate culture for innovation and sustainability, and consolidate the divisional structure to make it more flexible.

The fifth component is the customer.

A month ago, MBSA opted to postpone to early 2022 the local production of its first fully electric vehicle, the EQC where Its initially planned 2020 local introduction was postponed mainly due to the disruptions caused by Covid-19, according to a report from Engineering News.

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