VALUATION HIGHLIGHTS
- Mercedes Benz Cars & Vans constitute 58% of the Trefis price estimate for Mercedes-Benz Group AG's stock.
- Daimler Mobility constitutes 32% of the Trefis price estimate for Mercedes-Benz Group AG's stock.
WHAT HAS CHANGED?
- Latest Earnings
Mercedes-Benz group saw revenues for Q3 2023 decline by 1.4% year-over-year to Euro 37.2 billion ($39.5 billion) due to a weak macro environment, high interest rates, and considerable price competition, particularly in the electric vehicle space. The company's operating income also fell 7% to 4.8 billion euros ($5.06 billion) for the quarter.
POTENTIAL UPSIDE & DOWNSIDE TO TREFIS PRICE
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Total Mercedes Benz Cars Sold Globally: Growth in total Mercedes Benz Cars sold globally is strong, and we expect this growth to continue over our forecast period. We expect this number to grow steadily once the coronavirus pandemic situation gets clearer. Faster growth can lead to a significant upside in our price estimate.
BUSINESS SUMMARY
Daimler AG (Daimler) is the parent company of the Daimler Group. The company is engaged in developing, manufacturing, distributing, and selling a wide range of automotive products, mainly passenger cars, trucks, vans, and buses. Daimler operates mainly in the U.S. and Germany and sells its vehicles worldwide under various brands such as Mercedes-Benz, Maybach, Smart, Freightliner, Fuso, Western Star, Detroit Diesel, BharatBenz, Orion, and Setra.
SOURCES OF VALUE
The Mercedes Benz Cars division is the most valuable business for Daimler AG. It is more valuable than all the other divisions combined.
We estimate that the high prices and unit sales of Mercedes Benz contribute the maximum value to its business. Mercedes Benz can fetch higher prices because of its strong brand name. It hopes to tap into emerging markets, such as China, India, Russia, and Latin America, to help increase sales and grow market share. The International vehicle market is three-and-a-half times larger than the North American vehicle market.
KEY TRENDS
Mercedes-Benz aims to penetrate the electric vehicle market
- Demand for electric vehicles is rapidly rising worldwide mainly due to a relatively less harmful impact on the environment and lower running costs compared to gasoline-powered engines. In addition, governments around the world provide various incentives to boost electric vehicle sales. Moreover, plugin electric vehicles (PEVs) also have lower battery prices, adding to their appeal. However, sales of these vehicles haven't picked up as previously estimated, primarily due to lower ranges and a lack of infrastructure supporting battery charging.
- But with more and more companies developing electric cars with higher ranges and building charging stations, plug-in sales are expected to continue growing quickly.
- By 2030, Mercedes-Benz Cars aims to electrify its complete range of passenger cars. In total, they plan to offer more than 130 electrified vehicles.
- Over 2022, the automaker sold a total of 117,800 EVs, roughly double the 2021 number
Fast-growing luxury vehicle market in China to provide growth impetus
- Consumption of young-generation consumers (ages below 35) is growing at 14% annually, which is twice that of consumers older than 35. The newer generation also typically has a more sophisticated taste and is more free-spending. The growth in the upper-middle class and the emergence of the new generation are expected to increase sales of high-value products, including automobiles.
