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Diamler to decide on new distributor in Kuwait
August 11, 2018, 3:59 pm
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Global automotive corporation Daimler AG, owner of the world-class Mercedes-Benz luxury marque, has ended its 64-year relationship with its Kuwaiti partner Abdul Rahman Albisher & Zaid Alkazemi Company.

An internal-document circulated in mid-June among management staff at Albisher & Alkazemi had disclosed that Diamler AG would be terminating its six-decade old distributorship with the company by the end of 2018.

In an official statement confirming the end of the distributorship, Diamler AG said: “Daimler is now in the process of selecting a new distributor for Mercedes-Benz in Kuwait… We are constantly analyzing our sales structures. This is part of Daimler’s strategy of always offering the best.”

Though reasons behind the decision to divorce the distributorship and seek a new partner were not given, speculation has been rife that ongoing feud between shareholders in the Kuwaiti firm led Diamler AG to take the decision. Among the contenders looking to take up the new Mercedes-Benz distributorship are stalwarts on Kuwait’s automotive scene and already own distributorship for various international vehicle brands.

Incidentally, one of the largest shareholders in Diamler AG is the Kuwait Investment Authority (KIA) which holds a 5.33 percent stake as of November 2017. According to the German financial market regulator, BaFin, other large shareholders include the global investment management firm BlackRock, with a 5.95 percent stake and Renault-Nissan alliance with a 3.1 percent hold in the company.

In early February of this year it was reported that Chinese car manufacturer Geely, the current owner of Volvo and Lotus sportscars, was looking to purchase a 3 percent stake in Diamler AG. But Daimler executives had then said they saw no need to take on another industrial partner in China because there is significant capacity for expansion in a venture jointly run with China’s BAIC Motor.

The KIA relationship with Diamler AG dates back to November 1974, when the Authority acquired a 14 percent stake in the company for $329 million that has since grown in value to over $6 billion.

A high-profile ceremony was held in 2014 at the Mercedes-Benz Museum in Stuttgart, Germany, to mark 40 years of this partnership. The event was attended by Kuwait’s Prime Minister, His Highness Sheikh Jaber Al-Mubarak Al-Hamad Al-Sabah, Chairman of the Supervisory Board of Daimler AG, Dr. Manfred Bischoff, the Chairman of the Board of Management of Daimler AG and Head of Mercedes-Benz Cars, Dr. Dieter Zetsche, and the then Finance Minister and Chairman of KIA, Anas K. Al-Saleh.

Speaking on that occasion, Dr. Zetsche, thanked KIA for its four decade-long loyalty as a strategic Daimler investor. “Today, we are stronger than ever before. We are posting record sales figures, have the world’s most valuable premium passenger car brand and are the world’s leading global commercial vehicle manufacturer… “Our success is the success of our shareholders… Our finest days are yet to come”.

However, the move to terminate the company’s long-standing relationship with its Kuwait distributor and take the brand to a new dealer, will probably determine whether those fine days will come any time soon in Kuwait, or soon enough for Diamler AG. In its latest report on sales, the company said it had sold a total of 833,000 vehicles in the second-quarter of 2018, a 1 percent increase over the same period a year earlier. But the $2.1 billion in net profits that the company garnered in the same quarter were significantly less than the $2.9 billion it made in the second-quarter of 2017.

 

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