Now that Daimler has been rewarded a share-price bump for embracing a breakup that investors long desired, it's intensifying efforts to improve returns and keep the market-value momentum going.
The spinoff of Daimler Truck announced earlier this month was a historic step toward abandoning the conglomerate structure that has been weighing on the company's valuation for years.
Mercedes-Benz's upcoming electric cars and refreshed S-Class and C-Class models will show its shift toward more upscale vehicles packed with sophisticated gadgetry is picking up speed, CEO Ola Kallenius and Chief Financial Officer Harald Wilhelm said in a joint interview. Daimler Truck also has all it takes to compete in the global industrials sector, they said.
"We will make the gradient steeper," Kallenius said of Daimler's push for profit-margin improvement. The enormous valuations investors are assigning to luxury-goods manufacturers and technology companies show that "there is a lot of potential in the market, and now it's up to us to perform."
While the executives did not refer to other companies by name, two small-volume players in the auto industry are the envy of others: Tesla, which delivered just half a million cars last year but boasts a $783 billion market capitalization, and Ferrari, which shipped just over 9,100 units and is worth almost $40 billion.
By contrast, Mercedes sold more than 2.16 million cars last year, but Daimler's market value is just 69.2 billion euros ($83.9 billion).
Daimler shares surged to their highest since May 2018 after management unveiled their spinoff plan earlier this month. Other German industrial conglomerates have had mixed success trying to streamline their operations to better compete in a rapidly changing environment where software and data play increasingly important roles.
Siemens has been a success story, while Daimler's larger rival Volkswagen Group has struggled to push through structural changes. Thyssenkrupp's woes have underscored the risks of moving too slowly to revamp operations.
Daimler traces its roots to the inventors of the automobile. In 1886, Carl Benz registered a patent for his gasoline-powered vehicle, while Gottlieb Daimler separately engineered a motorized carriage. Both entrepreneurs pursued development of passenger cars and commercial vehicles. The latter was always the smaller business, but it gradually expanded into a second industrial pillar with sizable industrial sway. Deutsche Bank helped broker the merger into Daimler-Benz in 1926.