Whatever Mercedes does, BMW and Audi seem to be doing
better. Mercedes-Benz, owned by Daimler AG (NYSE:DAI), was the
biggest luxury automaker in the world until 2005, but currently
trails BMW and Volkswagen's Audi. The automaker signaled its
intent to regain the title of the world's largest automaker but BMW
and Audi have only extended their lead this year.
Take November, for instance. Its global sales rose 5.7%
to 120,346 units helped by strong North American sales.
However, they were again overshadowed by BMW and Audi whose sales
stood at 145,452 and 123,600 vehicles respectively.
Its American sales grew 13 percent to 30,315 units in
November helped by the E-class sedan but were beat by
BMW's 31,213 vehicles. Mercedes-Benz has so far been the
leading luxury automaker in the U.S. in 2012 but BMW has been
breathing down its neck and inching ever closer. The former leads
the latter by just 1849 vehicles now and their respective positions
could reverse in the last month of the year.
See full analysis for Daimler AG
Even in China where you expect the non-Japanese automakers to
benefit from the recent anti-Japanese backlash, Mercedes'
sales tumbled 6.6% to 16,876 units. BMW and Audi, on the other
hand, posted sales growths of 62% and 25.9% respectively.
However, There Is Hope
One of the reasons why BMW and Audi continue to outsell Mercedes
is because the automaker has one of the oldest
portfolios. While new models have accounted for 90% and
115% of the incremental sales for BMW and Audi respectively in the
last three years, they only accounted for 15% of Mercedes's
incremental sales. And therefore the automaker has stepped up its
spending on R&D significantly with the total expense expected
to be around $14 billion for 2012 and 2013 combined.
, launched in September, is already doing very well with the
model's bookings having already exceeded 90,000
units. Mercedes does not reveal the sales of A-class
separately each month but the combined sales of A-class and B-class
surged 38% in November. Furthermore, the new model is yet to be
launched in several key markets such as China and India. So, the
next year could be huge for the model as it will reveal the true
selling potential of the vehicle.
Mercedes-Benz will also be looking to bolster its American sales
in 2013 as the automaker looks to roll out the new CLA 2014 during
the next year's Superbowl ad campaign. The four-door CLA,
slotted below the C-class, will be company's entry-level model
in the United States. It will be priced around $30,000. The
next generation C-Class should arrive in 2014 as well.
In total, Mercedes will launch 10 new vehicles by 2015
which will widen its portfolio to include a greater variety of
compacts, coupés and SUVs. Even though it looks like
Mercedes will not be overtaking BMW or even Audi any time soon,
there is still an opportunity for upside as the new models could
potentially help accelerate the sales growth.
Margins could also benefit as the additional top-line helps
spread out the fixed costs over a bigger base. Moreover, a greater
proportion of the automaker's vehicles will be manufactured in its
Hungarian plant, the low-cost hub, so we could see a rise in the
We have a
price estimate of $56 for Daimler's stock
, which is about 20% above the current market price.
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