The break up

It seems that the big automakers which have dominated the market for the best part of a century are being forced to break up their businesses in order to compete with rivals from Silicon Valley and Asia, once again showing the overwhelming rise of startups and new establishments from the technology industry that want a piece of the mobility pie. For example, Daimler has recently unveiled a new corporate structure which is designed to give its trucks, mobility services and its Mercedes-Benz car division greater scope to chase growth and compete during the ascent of mobility. Through this reorganisation, Mercedes-Benz Vans and Cars will become a part of Mercedes-Benz AG, as its commercial bus and truck operations will be grouped into Daimler Truck AG. This leaves room for its mobility operations to merge with the company’s financial services division, forming Daimler Mobility AG.  

This news follows Ford’s decision to create a new spin-off company dedicated to self-driving cars named Ford Autonomous Vehicles. The automaker also announced that it is planning a restructuring of its global business model and has previously spun-out more technology-focused services, such as ride-sharing through Ford Smart Mobility. By doing so, Ford has created a wholly-owned subsidiary that will be designed to compete like a startup. CEO Jim Hackett has spent his reign at the top focusing on these new mobility solutions, such as ride sharing, carsharing and even e-bikes, which has completely transformed Ford’s business structure, allowing it to compete with more agile startups. 

Both of these decisions show how the automotive industry wants to keep up with the technology industry’s conquest in this field, as future mobility solutions bring rapid change and opportunities. Although Daimler’s plan won’t come into effect until 2020, the company is ready to develop its existing structure and adapt to the market boom. These two global automakers will start a trend, as rivals search for the same entrepreneurial freedom and customer focus so that they are not left behind. This will allow them to create new partnerships with technology and mobility companies much quicker, which is extremely important in a period where everyone is joining forces.   

Automakers have had a hard time in recent years, pushed out of comfort zones by new players as consumers become attracted to different forms of transport, such as ridesharing and connected car technology. They are now also being forced to adapt to the growing demand of electrification which, thanks to government incentives and the rise of new players such as Tesla, is skyrocketing; not to mention the upsurge of autonomous technology as companies such as Google are making a huge impact on the transport sector. What was once merely an idea, has erupted in spectacular fashion, with automakers having to quickly progress from toying with the idea of a new business model to taking the plunge into the new world of subscription services, autonomous cars and electrification.  

Of course, Daimler and Ford are not the only automakers involved in this shift. We have already seen General Motors invest in Lyft and a partnership between Chrysler and Waymo, but the recent decisions made by Daimler and Ford illustrate a desire to address the industry-wide shift internally and head-on. This is a smart move on both accounts, allowing these companies to set up new startup-esque spin-offs that can operate freely and succeed - or fail - outside of the main company structure. This also allows investors to know exactly where their money is going, which should draw in additional funds and partnerships. Whether it is a desire for change, or even the fear of failure in a demanding market, this is a great thing to see and, over the next few years, will pay off for everyone involved.  

Alex Kreetzer

Editor: Alex Kreetzer

Editor-in-chief: Peter Wooding

Circulation & Distribution Manager: Zoe Chapman

Additional Journalists: Shaun Hunter

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