Mercedes-Benz valued at half of BMW

Article by Christian Andrei, on December 17, 2012

As Daimler CEO Dieter Zetsche works for Mercedes-Benz to get back the title of world's biggest luxury carmaker, its investors have valued the brand’s cars unit at half of BMW’s value. BMW’s market capitalization has increased to 45 billion euros ($58.8 billion) compared with 42.2 billion for Daimler.

When subtracting a reasonable price for Daimler's truck business (which is the biggest in the world), the value attached to Mercedes passenger cars by investors is around 25 billion euros. Hans-Peter Wodniok, an analyst with Fairesearch in Kronberg, Germany, said that the market believes that Mercedes’ prospects are much worse than those for BMW. He added that the market is “always right” and that BMW leads when it comes to innovation.

The Mercedes marque has been held back by the slow growth in China, slow expansion into popular segments such as compact sport-utility vehicles, and its failure to attract a big portion of the younger generation of drivers. These enabled BMW and Audi to increase their sales lead in the luxury category.

The gap grows bigger one year after Zetsche, whose existing contract is expected to expire at the end of 2013, pledged to nearly double deliveries to 2.6 million vehicles by the end of the decade and get back the top spot, which Mercedes gave up in 2005.

Its campaign has had a difficult start. Zetsche put off Mercedes’ profit target in October, placing this goal at least four years behind its original schedule. After earnings fell in 2012, Mercedes implemented a drive to reduce costs by 2 billion euros by 2014 under a program named "Fit for Leadership." BMW’s rise has changed the usual order among German automakers. Daimler, which made an attempt to take over BMW in 1960, had a market capitalization that’s 15.5 billion euros higher than that of BMW only a couple of years ago.

Topics: mercedes-benz, bmw

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