Mercedes’ Strong SUV Lineup Is Helping It Weather The Storm In The US Automotive Market
Daimler AG‘s Mercedes-Benz division forms around 60% of the group’s valuation as per our estimates. The luxury division has had a solid year or two and is on pace this year to retake the global premium sales crown it had lost in 2005 to BMW. Mercedes furthermore lost its second position to Audi in 2011, but is now ramping up sales in crucial markets such as China and Europe. But, in particular, Mercedes is the only top premium seller in the U.S. that has witnessed volume growth this year. Although Audi has grown too, the automaker sells almost half the amount of vehicles that Mercedes sells in the country.
The U.S. automotive market seems to have plateaued after six consecutive years of strong growth rates, following the recession. The re-filling of fleets took place aggressively over the last several years, and now the consumer demand has slowed down, as expected. S&P Global Ratings cut its estimate for automotive sales in the U.S. in 2016 to 17.5 million vehicles from 17.8 million, citing slowing customer demand and the impact of the U.K.’s vote to exit the European Union on the country’s economy. [1] S&P cut its estimate for growth this year in the U.S. economy to 2% from the previously estimated growth of 2.3%. Automotive sales are expected to fall this year from the record-breaking 17.5 million sales in 2015, and this trend could continue into the next couple of years.
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While the light-duty vehicle sales in the U.S. are up only 0.6% year-over-year through August, premium vehicle sales are in fact down 9.5% because a chunk of these sales (roughly 81%) are formed by cars, the demand for which has fallen drastically in the last year or two. Mercedes still has been able to weather the storm on the back of its strong lineup of SUVs, Crossovers, and even Vans. In fact, the Mercedes-Benz Vans division has sold over 22,000 units in the U.S. so far this year, up 24% year-over-year.
Have more questions on Daimler? See the links below.
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- Daimler Earnings Review: Mercedes Posts Record Results Through June, But Margin Down On Added Expenses
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Notes:
- S&P Cuts U.S. Auto Sales View on Slowing Demand, Brexit Effect, bloomberg.com [↩]