Dieter Zetsche, Daimler's chief executive, will step down next year as part of the German carmaker's response to upheaval in the sector, setting the stage for its2020restructuring. The parent of brands including Mercedes said yesterday that Mr Zetsche, who has led Daimler since 2006, would be replaced by Ola Kallenius, a board member who oversees research and development.
Daimler said the change of management was in response to “challenges presented by the transformation of the automotive industry”. Carmakers are under pressure to electrify their fleets, invest in autonomous driving and connect cars to the web to make them “iPhones on wheels”. New entrants, from Tesla to Google, have scared off investors and placed carmaker valuations at recession-era levels.
Mr Zetsche is planning on returning to the carmaker after a two-year “cooling- off period”, when he will take over the chairmanship of the supervisory board from Manfred Bischoff, whose contract expires in 2021. Supervisory boards hold management to account at German companies.
Mr Zetsche is departing six months earlier than expected — in May instead of at the end of 2019. His departure indicates Daimler is anxious to have new people in place for the restructuring it announced in July, which is set to begin in January 2020. Daimler is splitting up Mercedes-Benz cars, Daimler Trucks and its financial arm, then placing the three divisions under the Daimler AG umbrella.
“It's a very smart move, it's well-planned, it's a smooth transition,” said Christian Ludwig, analyst at Bankhaus Lampe.
Mr Zetsche has spent four decades with Daimler and has been a board member since 1998. He is known to Americans as “Dr Z” for a series of humorous commercials in which he appeared when Daimler merged with Chrysler — an alliance considered to have been a disaster. He set Mercedes on a path that would see it rebound strongly from the financial crisis and overtake BMW as luxury sales leader.
Max Warburton, a Bernstein analyst, said: “Mr Zetsche can be given credit for a number of achievements. Most notably, he extracted Daimler from Chrysler just in time in 2007 and then he rebuilt Mercedes' product line, brand and Chinese business throught his decade.”
|Daimler: the need for Swede|
|Daimler knows how to engineer a smooth ride over rough terrain. The market was barely jolted by news of top management changes yesterday. Swede Ola Kallenius was heir apparent. Even so, he is something of an outsider. He will be the first non-German chief executive and the first for 23 years who is not a mechanical engineer. That may help him navigate the bumpy road ahead.
He is also a financial specialist and a communicator. Breaking bad news about the profits outlook should be correspondingly easier. New technology is disrupting the industry. Electric and self-driving vehicles threaten to topple empires built from engine blocks and steering columns. Daimler's immediate challenges include fallout from the diesel scandal, the costs of preparing for new emission standards and a trade war. The company issued a profit warning in June. The pressures are reflected in a rock-bottom rating. The shares trade on just over six times next year's earnings. In 2015, the multiple was double that.
Such problems have a habit of cutting short the tenure of bosses. Volkswagen's chief executive Matthias Müller was ousted in April. But Daimler's long-serving boss, Dieter Zetsche, is not leaving, only moving up the ladder. To comply with governance rules, he will have a two-year “cooling off” period, becoming chair of the supervisory board in 2021.
Mr Zetsche's flair helped Daimler overtake rivals to become the world's biggest luxury carmaker in 2016. But seeing him waiting in the wings, twirling his mustachios, could inhibit decision-making by Mr Kallenius. He needs the boldness to ignore Mr Zetsche's route map when needed.
In July, Daimler said it would split Mercedes-Benz cars from Daimler Trucks. This could pave the way for a, potentially, €30bn truck unit spin-off. More significantly, Daimler has set aside billions for electric technology and pledged that a big proportion of its fleet will be electric by 2022. It is also investing heavily in driverless vehicles. A €10bn credit line obtained in July will help with the funding.
Mr Kallenius cannot win without upsetting vested interests, including German mechanical engineers. Committed thinking is his enemy. If Karl Benz had been prone to this, he would have improved the horse carriage, not invented the motor car.
BY PATRICK MCGEE