Daimler: The Name Game Is Over
October 8, 2007
Daimler’s previous coupling paved the way for a number of company names. The turmoil continued up to its unsuccessful marriage with the Chrysler Corp. But the naming game has to come to an end. In light of Chrysler’s sale, the German automaker announced its new name – Daimler AG.
According to Automotive News, the newly renamed Daimler AG will call its passenger car business Mercedes-Benz Cars. The announcement was made last Thursday by CEO Dieter Zetsche. According to the report, the shareholders were summoned to approve a name-change to Daimler AG to DaimlerChrysler after the sale. Trouble is, the new name didn't reflect pioneer Karl Friedrich Benz' involvement in the company.
In 1926, Benz's name was affixed to the Daimler name, where it remained until seven years ago when it was replaced by Chrysler. Zetsche said that Daimler had to be the name of the group, but added there was still plenty of room to honor Benz.
"The proud name of Benz will not only remain prominent, it will have significantly higher visibility. The group name Daimler clearly indicates that we are writing a new chapter of our history, while at the same time continuing our tradition as the inventor of the automobile," Zetsche said. "We're combining our proud origins and a bright future, honoring our long tradition and harnessing our pioneer spirit. The name Daimler is an expression of this dual identity", he said.
In 1998, Daimler paid 25.5 billion euros for the American automaker Chrysler. In August, it sold 80 percent of Chrysler for just five and a half billion. And the deal that went superbly sour is still costing Daimler an estimated two and a half billion euros this year.
At present, the German automaker plans to bolster profitability at Mercedes, the world’s second biggest manufacturer of luxury cars. The maker of the Mercedes 500sel radiator will achieve earnings before interest and tax equal to ten percent of sales by 2010 “at the latest,' Zetsche told shareholders at a special meeting in Berlin.
Zetsche leads the German company, the world's largest manufacturer of trucks, whose history goes back to the 1880s. Revenue at Mercedes Car Group, which includes the Mercedes-Benz, Smart and Maybach marques, and at the heavy-truck unit are double the figures of a decade ago, before the marriage with Chrysler. “The strength of our brands is one of our most valuable assets,' Zetsche noted.
Daimler’s history started with the first patented car in 1886 by Karl Benz and a model made by Gottlieb Daimler and Wilhelm Maybach in the same year. In 1926, Daimler's and Benz's companies merged, adding a three-pointed star and the name Mercedes-Benz to their lineup.
“By reviving the global brand of Daimler-Benz, the board of management and the supervisory board could document this entrepreneurial obligation and have their future performance measured by that successful era of the past,' said shareholders Ekkehard Wenger and Leonhard Knoll on the company's Web site.
The $36 billion takeover of Chrysler, which created DaimlerChrysler AG, was untied two months ago with the sale of 80.1 percent of the U.S. division to Cerberus Capital Management LP. Daimler agreed to take on $1.5 billion of Chrysler's debt and is keeping 19.9 percent of the automaker.
“We're drawing a line through the strategy of the previous chief executive that cost shareholders billions and damaged the image of the company,' said Hans-Richard Schmitz, DSW shareholders association’s spokesperson.
Daimler plans to buy back 7.5 billion euros of shares over the next year. As of the end of September, DAimler had spent 1 billion euros to repurchase 15.8 million shares.
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