This article is written exclusively for Investing.com
Although there are cars, along with car companies, that are still going strong and are named after these three men – Gottlieb Daimler, Wilhelm Maybach and Karl Benz – each is long gone. But their signature achievements, creating a three-wheeled car powered by a gasoline-powered internal combustion engine (Benz) and the four-wheeled, four-stroke car that soon followed (Daimler and Maybach) continue to thrive today.
The clearest lineage of these original thinkers today is in the Daimler Group (OTC:).
Daimler currently consists of both Mercedes-Benz Cars & Vans, one of the clear leaders in the premium car segment, and Daimler Trucks & Buses, probably the largest manufacturer of commercial vehicles in the world.
The company is headquartered in Germany and spends a lot of time and typography discussing their green credentials. They have to; that keeps the Greens and the various governments at a distance.
But their real focus is still on innovative technologies and the most luxurious and enjoyable driving experiences, from ICE (Internal Combustion Engine) to BEVs (100% Battery Electric Vehicles). I will focus in this article on their automotive division, because as of Friday, July 30, 2021, the company management and the supervisory board of Daimler AG have approved the demerger of Daimler Truck by the end of this year.
If this happens, the shareholders of Daimler AG (DE:) will also own a 65% interest in the new Daimler Truck Holding AG, which will then be listed as an independent company on the stock exchange. (Daimler shareholders receive one share in Daimler Truck Holding AG for every two shares they hold in Daimler AG. Daimler itself retains a 35% minority interest in Daimler Truck Holding AG).
According to a report from Interbrand study in October 2020, Mercedes-Benz was named the world's most valuable luxury car brand, along with direct subsidiaries Mercedes-AMG, Mercedes-Maybach and Mercedes-EQ.
I have recently read numerous articles denigrating Daimler's management and noting that their fundamental values ??are not as good as some of their competitors. While there are others with higher profit margins (currently) and still others with a more favorable stock value (currently) who have more years of experience making and selling the best-rated luxury cars at any price, the others don't have the cachet from Mercedes.
Barring any downturn in consumer spending due to the Delta or another newer COVID-19 variant, Daimler will benefit from the rapid recovery in its home market of the European Union. The data is now approaching an unprecedented record. Daimler's is again growing at double digits and free cash flow has increased to €1.8 billion ($2.14 billion). In addition, the company generates record sales in China.
The recent launches of the S-class and Electric S-class have also been quite successful. (Daimler plans to have 50% of their cars hybrid or electric by 2030… In case you thought Mercedes was just for your parents!) Demographics are on their side.
The wealthy universe is expected to grow at a significantly higher than normal rate in the coming months and years, faster than recent growth in that category. Daimler's reputation for quality is unsurpassed and the typical high net worth buyer is often loyal.
Mercedes drivers are also usually active drivers who love the driving experience. (Unlike the "drivers" who seem to prefer going from point A to point B alone while playing video games the entire route?)
There will always be a market for drivers who want to drive, be it ICE, PHEV or BEV, and at a luxury level. Recent results obtained during the alleged “Tesla acquisition (NASDAQ:)” certainly confirm this:
Daimler Q2 results 2021
Source: Daimler website
Source: Daimler Roadshow investor presentation Q2 2021
Mercedes Cars: products and mix
I don't want to make short work of Daimler's truck and bus business – as the world's largest supplier of these vehicles, there is a whole 'nutter business' here with some powerful and well-known names. However, I also know that most shareholders don't hold most spin-offs. If history is any guide, most will sell the spin-off and keep the primary stock.
With that in mind, I think these last two slides of Daimler's Q2 2021 Roadshow presentation to investors sum up what I expect from Daimler cars as they appear this year and get rid of the truck and bus industry in the future:
Daimler Market Guidance 2021
Daimler Group project focus: Mercedes Car Business
In a future article, I plan to discuss only the Mercedes approach to the EV transformation of electric vehicles.
Important Disclosure: Unless you are a client of my company, Stanford Wealth Management, I do not know your personal financial situation. Therefore, I am expressing my opinion above for your due diligence and not as advice to buy or sell specific securities.
