Ola Källenius
The new head of Daimler has inherited a poisoned legacy with the diesel scandal.
Munich, WolfsburgDaimler-Boss Ola Källenius always has a smile on his face. He can inspire himself like a schoolboy on technical gimmicks and always radiates a certain nonchalance. But when it comes to business, the 1.95-meter blond boy from Sweden is completely emotionless and Scandinavian cool. “He’s not a buddy of anyone,” says a Mercedes manager who has known him well for years. “He is extremely strong on numbers.”
A real powerhouse with the 167 billion euros turnover heavy car and truck colossus Källenius does not have. To be able to show no real cliques in Stuttgart is in the current mixed situation but rather beneficial as a hindrance. After all, the 50-year-old does not have to pay any attention to anyone. He can clean up at the mark with the star vigorously. How necessary this is is shown by the latest profit warning.
On Sunday evening at exactly 19:03 cashed Daimler the earnings forecast for the third time within one year, According to this, the conglomerate no longer calculates with a slight increase in earnings, but only with an operating profit at the level of the previous year, that is, around 11.1 billion euros. In relation to the analyst estimates, Daimler is thus screwing down its earnings expectations by 600 to 800 million euros.
On the stock market, you are horrified, “The renewed profit warning at Daimler is a really big disappointment,” states Jürgen Pieper from Bankhaus Metzler. The stock of the vehicle manufacturer slumped on Monday, meanwhile, by almost five percent. “Very annoying” is the whole thing, growled an investor. “I have no more expectation about Daimler,” says a large shareholder.
Frank Schwope, analyst at the North LB, would not be “surprised”, if on Daimler soon more costs in the billions would come. Finally, the Swabians justify the bleak outlook with the diesel scandal and the resulting increase in expenses for “various ongoing regulatory proceedings and measures”. In order to regain the favor of investors, cost control must now have “priority,” says Christoph Ohme of the fund subsidiary of German bank, DWS.
The Kraftfahrt-Bundesamt (KBA) only ordered the end of last week a mandatory recall for 60,000 sport SUVs of the type Mercedes Benz GLK on. The reason: Daimler has found in the opinion of Flensburg officials an illegal defeat device for three specific variants of the SUV with the emission standard 5, which were produced between June 2012 and June 2015. Because other Mercedes models could be affected, in which the diesel engines OM 651 and OM 642 are installed, the KBA has extended its investigations. It’s about hundreds of thousands of vehicles with a star on the hood.
Mercedes GLK
The mostly bought as a diesel SUV is not built since 2015.
(Photo: DAPD)
Daimler wants to appeal against the KBA decision. The Group considers the functionalities used to be “permitted”. Nevertheless, the Swabians have to bow to the callback. And that costs a lot of money. Daimler has increased its provisions. The result in the second quarter will be burdened “by a high three-digit million amount”.
Metzler analyst Pieper holds the diesel scandal as reason for the profit warning nevertheless forward. That is a “bit of a smoke candle”. Finally, the group also suffers operationally from a variety of problems. After the first five months, sales of the Mercedes car division are nearly five per cent down on the previous year. In the first quarter, the Swabians did not make any money, but burned two billion euros. In the buses and vans divisions, the conglomerate even writes losses.
In particular, in the van division hooks it. Daimler had now for the second time this year to correct its forecast for the Vans down. The return on sales will be negative, in the worst case at the end of the year at minus four percent. One of the reasons: The 500-million-dollar Sprinter plant in Charleston, USA, has not got off to a good start since opening in the fall of 2018. The quantities are just as little as the quality.
But headaches are also causing other managers in Stuttgart. In the Mexican community work with Nissan in Aguascalientes it jerkelte long at the run-up of the A-Class sedan – also because of quality defects. And in Tuscaloosa in the US state, it is still not around in the production of the GLE. Three suppliers are causing problems.
The sporty SUV have to be improved many times, thousands of vehicles are parked once, sometimes even on open spaces outside the factory. “This is one of our models with the highest contribution margins,” a manager in the German headquarters snarled: “It’s unrealistic that we can not get that under control.” It also sometimes crunches among the executives. Various smaller turf wars would be fought since long-time ruler Dieter Zetsche A month ago, the CEO was handed over to Källenius, according to group circles.
Waiting for the big austerity program
The new frontman of the 300,000-employee group has inherited a poisoned legacy with the diesel scandal, and the car markets around the globe are collapsing, and certification processes are becoming increasingly costly. The challenges are huge. “The love for the auto industry has gone out,” sums up a major shareholder. You would not wish for such a start as Källenius would experience, explains Arndt Ellinghorst from investment advisor Evercore ISI. But the Swede can use the difficult environment to regain confidence.
Investors are finally expecting details of the austerity program that the group announced in February. “How does the run-up of the electric models affect the margins, which long- and medium-term goals is pursued by the management”, asks Christof Ohme of the Fondpick German bank DWS and demands more transparency.
Soon it will be clear where Källenius wants to make precise cuts. The results of the internally called “Move” initiative will be available in the summer. Everything is under scrutiny: Excessive travel costs and questionable administrative activities as well as the lush engine variance and the sometimes excessive vehicle range. Unlike VW Of course, Daimler wants to cope with the transformation in the auto industry without actively cutting jobs. “We have clearly stated that there is no staff reduction program,” says Works Council Director Michael Brecht.
On the other hand, Daimler is hard on the supervisory authorities and politicians. A scam like at Volkswagen they do not want to concede in Stuttgart, it was said in circles close to the group. Such behavior would have fatal consequences for the reputation. The customers would also buy status with a Mercedes, with the use of a cheat software would be difficult to reconcile.
Above all, management is concerned with tangible economic interests. In the US and Europe, countless clients are lamenting against the Group. Claims for damages go into the billions. As soon as Daimler would admit mistakes, their chances of success rose, said an industry representative.
The strategy of the Daimler superiors could ultimately even work. As long as the Group complains against any decision, the Group is legally innocent. If Daimler and KBA have succumbed to the Federal Court, then the vote could also be in the interests of the Swabians. Proper evidence that Daimler deliberately used a fraudulent software in the engine control, would not be easy, said the industry representative. This will be treated differently in a German court than in the US, where the proceedings usually end in a settlement.
The price of this strategy is a meanwhile strained relationship between politics and Daimler. Federal Transport Minister Andreas Scheuer (CSU) twice quoted the former Daimler CEO Zetsche 2018 in publicity as a result of the diesel scandal to Berlin. To this day, in Stuttgart, the slogan issued by Zetsche in September 2015 that Daimler will not be manipulated. This stubbornness, in turn, forces the ministry to take tough action, as the industry says.
The procedure is also controversial at Daimler. Some fear that the reputation of Mercedes through years of legal proceedings could suffer greatly. “Källenius has the chance for a clear cut, he should perhaps use,” says a skeptic.
More: It’s not just the diesel scandal that causes Daimler’s profits to erode. The operational problems are blatant. The new boss Källenius must save. A comment.
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