New Daimler boss needs to be bold
Daimler knows how to engineer a smooth ride over rough terrain. The market was barely jolted by news of top management changes on Wednesday. Swede Ola Kallenius was heir apparent. Even so, he is something of an outsider, as the first non-German CEO and the first in 23 years who is not a mechanical engineer. That may help him navigate a 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 2019’s earnings. In 2015, the multiple was double that.
Such problems have a habit of cutting short the tenure of bosses. Volkswagen CEO Matthias Müller was ousted in April. But Daimler’s long-serving boss Dieter Zetsche is only moving further 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.
Zetsche’s flair helped Daimler overtake rivals to become the world’s biggest luxury car maker in 2016. But seeing him waiting in the wings, twirling his mustachios, could inhibit decision-making by Kallenius. He needs the boldness to ignore Zetsche’s route map when needed.
Daimler has earmarked 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.
Kallenius cannot win without upsetting vested interests and German mechanical engineers. Committed thinking is his enemy. If company co-founder Karl Benz had been prone to this, he would have improved the horse carriage, not invented the motor car. London, September 27