Daimler's Ola Kallenius is making a dramatic move to win over investors who have knocked the automaker for keeping its luxury-car and commercial-vehicle operations under one roof.
The Mercedes-Benz maker plans to distribute a majority of its Daimler Truck unit to shareholders by year-end, expecting it will quickly qualify for Germany's benchmark stock index. Its most iconic brand also will become the name of the auto company, a move that underscores the CEO's desire for a clear separation of the two businesses.
For Kallenius, it's a split in more ways than one.
The decision to fundamentally change the company's structure marks a major break from his predecessor, Dieter Zetsche, who was pressured in the wake of Daimler's divorce from Chrysler to make deeper changes.
Zetsche rejected the car-truck separation idea, arguing that a broader industrial presence would offer more protection against swings in individual market segments.
Kallenius made the case Wednesday that cars and trucks will go through diverging technological trends in the coming decades.
Whereas passenger cars are quickly shifting toward battery-electric power, hydrogen is likely to play a bigger role in the future of commercial vehicles. Investors applauded the plan by sending Daimler shares up almost 9 percent to their highest close in almost three years.
"This is a watershed moment for Daimler," Tom Narayan, an RBC Capital Markets analyst with the equivalent of a buy rating on the stock, said in a note. "This is key in getting a proper valuation."
Daimler's earnings and stock price started to languish late in Zetsche's 13-year run atop the company, and Kallenius had to issue several profit warnings after becoming CEO in May 2019.
The 51-year-old Swede has started to make his mark, laying out plans to revive returns by focusing more on bigger cars, such as the flagship S-Class sedan, and cut costs.