A shrinking market in Western Europe could not stop Daimler AG‘s (NYSE:DAI) truck sales from rising 20% in the first eight months of the year. North American sales grew 27% while Russian sales surged by 80%.  Daimler has also started the production of Antos, the truck series it unveiled in July, which caters to the needs of the short-radius distribution industry.  We estimate trucks constitute almost 30% to the total stock price.
Earlier in the year, Daimler signed two agreements with Japanese automaker Nissan Motor and Russian truck manufacturer Kamaz to consolidate its truck business in the respective countries. As per the agreements, Daimler will provide its Fuso Canter light trucks, manufactured by its Japanese unit Mitsubishi Fuso, to Nissan and, in return, Nissan will provide Daimler with Atlas F24 trucks. The deal with Kamaz will see Mercedes-Benz supplying truck cabs that the truck manufacturer will use in its upcoming trucks.
Daimler’s Indian sales are expected to boost in the coming months as the company introduces new models under the BharatBenz line of trucks. Under this brand, Daimler will roll out 18 new models, designed specifically for the Indian roads, in the next 18 months. To build the line of trucks, it has invested $850 million in a facility in India, which is the company’s largest investment outside of Europe.
Overall, Daimler expects the global truck market to grow 50% in the next 10 years.  Daimler’s strategy in emerging markets involves introducing trucks that are less technologically advanced but physically tougher than the traditional trucks offered in the U.S. or Europe, but more technologically advanced with better mileage than the trucks that dominate the emerging markets presently.
We have a price estimate of $61 for Daimler’s stock, which is about 20% above the current market price.Notes:
- North America lifts Daimler truck sales as rivals flag, September 18, 2012, reuters.com [↩]
- Start of production for Mercedes-Benz Antos, August 31, 2012, daimler.com [↩]
- Daimler sees strong long-term outlook for global truck market, September 18, 2012, fleetowner.com [↩]