Daimler AG‘s (NYSE:DAI) luxury car brand, Mercedes-Benz, recorded its best monthly sales ever in China in November, up 24 percent year-over-year. [1] But the carmaker’s revenues from the China, Daimler’s third largest market, is now at risk from Chinese decision to levy punitive duties on U.S. imported cars in retaliation to the country’s failed attempt to block U.S. tariff on Chinese tires. [2] 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.
While Daimler announced plans to invest about 2 billion euros into its joint venture with Beijing Benz Automotive Co. Ltd to expand its local production capacity in China, the company also produces many vehicles in the U.S. and plans to invest as much as $2.4 billion to expand production at its plant in Tuscaloosa, Alabama ((Mercedes-Benz Heading Toward New Production Record)) It has been reported that China will levy duties of 2.7 percent on sales of U.S. made vehicles of Daimler, which will hurt margins at Daimler’s Mercedes-Benz division, leading to further downside to our estimate for Daimler’s stock. [3]
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We currently have a price estimate of $72 for Daimler’s stock, which is well above its market price.
See our full analysis for Daimler’s stock here
