Daimler AG (NYSE:DAI) stock has climbed more than 18% since the beginning of last week. During the week Daimler reported its highest global monthly sales ever for Mercedes-Benz in November 2011, up 8.3 percent year-over-year (yoy).  But while Mercedes made impressive gains in the U.S. and China, the brand foundered in Germany which has traditionally been its largest market. Last week, the German auto-industry association, VDA, projected that auto sales in Germany as well as production by Germany carmakers will remain flat or decline in 2012. ((German Car Market Won’t Grow in 2012)) Thus Daimler’s sales and margins is likely to suffer in its home market in the medium-term. Daimler’s Mercedes-Benz competes globally with BMW (GR:BMW), GM (NYSE:GM), Ford (NYSE:F), Honda (NYSE:HMC) and Toyota (NYSE:TM) among others.
We currently have a price estimate of $72 for Daimler’s stock, which is much above its market price.
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In another development, Daimler has decided to end a decade of loses at Maybach by shutting the super-luxury brand by 2013 and replacing it with new models of Mercedes S class instead. ((Daimler to Drop Maybach, Focus on S-Class)) We believe that this transition will help Daimler to save on its production costs as the new models will potentially be based off the existing Mercedes platform, which will use of common sets of vehicles parts and spares to make vehicles. This will also help reduce costs in terms of engineering time, parts and services, as well as tools and machinery and boost margins in the long-term.
You can drag the trend lines in the modifiable charts above to see the impact of these trends on Daimler’s stock value.Notes: