(Bloomberg) -- After long shying away from buybacks, Mercedes-Benz Group AG is now looking to reward investors more regularly as it tries to bolster its flagging valuation.

There’s potential for additional buybacks beyond the latest €3 billion ($3.2 billion) program if Mercedes can produce free cash flow like it has in the past years, Chief Executive Officer Ola Källenius said Thursday. The shares jumped the most since July 2022.

“Longer term, the policy that we have in place is an investor-friendly policy,” Källenius told Bloomberg Television. “We have their interest in mind going forward.”

Carmakers have returned more money to shareholders in recent months after benefiting from pent-up demand after years of supply-chain disruptions. General Motors, Ford and Stellantis spent a combined $22.7 billion buying back shares and paying dividends last year, while Renault last week proposed its biggest shareholder payout in five years.

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Mercedes hasn’t always been this generous, and in past years complained that its market valuation doesn’t match its position as a top maker of luxury cars. But late Wednesday, Mercedes announced plans to buy back as much as €3 billion in shares, starting immediately after the conclusion of an ongoing €4 billion program. When that repurchase was unveiled about a year ago, it was the company’s first in 15 years.

“Paying out continually higher cash flows is what investors and we have been asking for,” Bernstein analyst Daniel Roeska said in a note. “But in an ironic twist, it also signals that Mercedes does not see any incremental investment opportunities in its own business at this time.”

Mercedes gained as much as 6.1%, giving it a market valuation of around €76 billion. That’s only slightly above Ferrari NV, which sells a fraction of the cars Mercedes ships.

Mercedes also instituted a new buyback policy that is set to increase the frequency of repurchases. The company plans to use any free cash flow left after paying for the dividend and small-scale M&A for share purchases, it said Thursday.

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To stabilize cash flow, Mercedes may in the future sell shares in former subsidiary Daimler Truck AG, Chief Financial Officer Harald Wilhelm said during a call with reporters. There are no deliberations to do that now, he added. Mercedes owns about 30% of the truckmaker, which it spun off in 2021. It can’t sell any Daimler Truck shares until the end of this year due to a lock-up agreement.

While regular buybacks may please shareholders, they raise questions over future investments in strategic areas such as the costly transition to electric vehicles. Mercedes has had to contend with fiercer competition in its main market China and is still miles behind Tesla Inc. selling EVs.

“The buyback is no panacea for the battery-electric vehicle and other technology problems the sector is facing,” said Citi analyst Harald Hendrikse.

(Updates with potential Daimler Truck share sale in 9th paragraph.)

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