As Daimler AG is scheduled to announce its Q3 financial results tomorrow, many investors and analysts will pay special attention to the company’s sales outlook over the near-term given the tumultuous economic environment and sales of their new models. Over the last quarter, even though Daimler’s vehicle sales witnessed year-over-year (yoy) growth, the growth has decelerated in many markets such as China and Europe. Even though Mercedes-Benz sales in China might be bumpy in the near term, we expect the country to re-emerge as a major growth opportunity for the luxury-car brand in medium-term based upon Daimler’s planned new vehicle launches. In Europe, we expect Mercedes-Benz sales will be supported in the near-term by the launch of new M-Class and the new B-Class in November. Daimler’s communication policy has been criticized previously as the reason for their stock declines even after they reported solid earnings, and we will not be surprised if history repeats again. Daimler brands such as Mercedes-Benz, Smart, Maybach and Daimler compete globally with the likes of BMW, GM, Ford, Honda and Toyota among others.
See our full analysis for Daimler’s stock here.
European sales expected to recover on the back of M-Class and B-Class launch
Mercedes-Benz delivered its strongest sales since the beginning of the year with 120,982 vehicle deliveries last month. Mercedes-Benz sales in Germany, its largest market, dipped by over 10% yoy in September because of the brand’s strong growth in September 2010 and also because many customers are anticipating the launch of M-Class and B-Class. In Europe, we expect Mercedes-Benz sales will be supported in the near-term by the launch of new M-Class and the new B-Class in November.
Chinese auto-market growth beset by inflation
The growth of the Chinese auto industry has been falling in recent months compared to last year when Beijing boosted demand with tax cuts and subsidies. It has also been beset by rising inflation in China, which is forcing the government to continue its monetary tightening policy which is impacting auto sales growth.
In China, even though Mercedes-Benz sales were strongest for September 2011, aided by the recently-launched new generation C-Class, year-over-year (yoy) growth decelerated to 13%. This growth slowdown compared to last year was mainly due to China’s continuing monetary tightening policy which is beginning to affect luxury car market. We believe that the Chinese auto-market growth will remain bumpy until the government renews its stimulus program in light of worrying global economic environment after reigning in inflation.
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