I have lately been testing a parade of Mercedes-Benz and smart cars – from a fortwo cabriolet the size of microwave oven to a sporty little SLC 300 hardtop convertible; a GLE sport-utility; an E-Class sedan and coupe; and, even an exquisitely imposing S550 convertible hardtop.
I’ve not spent much time in a muscular sprinter van, popular with police breathalyzer units, and the smaller Metris van remains untested, too. But I can say that both are very good fleet values, according to the research firm Vincentric.
Point is, Daimler AG has been delivering a steady stream of new Mercedes, smart and Freightliner models for years now. They come in all shapes and sizes, and across price ranges: the smart fortwo starts at $17,300 while a Maybach S600 starts at $232,400.
In the heart of the Canadian market, Merc has its Honda Accord-fighter, the CLA, not to mention the B-Class station wagon. They run in the mid-$30,000s and up. Merc, while a luxury brand, has managed to cover an impressive swath of the marketplace. Rival BMW AG surely must have noticed.
Mercedes, in fact, passed BMW last year to become the world’s No. 1 premium car brand in the world. Why is quite simple: Mercedes has unleashed a torrent of new products in the last few years, while BMW’s new model cadence has been slower and certainly more haphazard.
I believe BMW has become sidetracked by its floundering i-Brand of electric cars and hybrids. The “greening” of BMW seems to have sapped the Bavarian company of energy and enthusiasm for what buyers want today, right now.
BMW has spent billions on the i-Brand and related “green” initiatives with not much to show for it in sales, revenue and profits. At least for now. The result: the gang in Munich could only wave as waved Mercedes passed them in the fast lane.
Daimler hasn’t been mortgaging the future to fund the present, however. No, the company is plowing billions into electrification and hybrids and cleaner assembly lines and all the rest, while also growing sales and revenue, and maintaining very healthy profit margins. True, Daimler has been caught in a worrisome diesel emissions scandal that reeks of collusion among car companies from Germany. This could end up costing Daimler dearly. Regardless, it’s a black eye for the company and the other German automakers involved.
Nonetheless, if I were an investor (and I am not, not in car companies, not any of them), I would take a closer look at Daimler. The stock is cheap and offers an appealing yield. Moreover, Daimler is investing in products, technologies and services that should make the company a formidable player in the auto industry for many years to come.
Consider: Daimler is making a $10 billion investment in electric vehicles and plans to roll out 10 new electrified passenger cars by 20200. Daimler estimates electric vehicles will account for 15-25 per cent of Mercedes-Benz sales by 2025.
Daimler is also building its own in-house battery (take note, Tesla), is developing an electric semi for its Freightliner division, and is moving quickly to take advantage of the rapidly emerging importance of electrified vehicles in the world’s biggest car market, China.
In China, Daimler is working to expand its presence in a joint venture that is being called Beijing Benz Automotive. Daimler and its Chinese partner, BAIC, plan to produce Mercedes-branded battery electric vehicles (BEV) by 2020, while also developing a deep and rich research and development presence in China.
This brings me to autonomous driving technology, where Daimler is a world leader. That’s good. Also good is Daimler’s vision for the smart brand. Smart is the tip of the spear for car-sharing and city car initiatives.
More immediately, if you’re a car buyer today, well, Mercedes quality is world class and resale values are excellent. Indeed, the Mercedes brand is strong and valuable and Daimler’s global infrastructure is good for owners and poses a formidable competitive challenge for all luxury brands.
Daimler isn’t the darling of investors, though, just consumers. Indeed, Daimler’s stock market capitalization is a relatively modest $64.76 billion. Tesla, you might wish to know, has a market cap of $58.63 billion (all figures in U.S. dollars).
This, of course, makes no sense. Daimler did $153 billion in sales last year and earned a profit of $8.53 billion. Tesla’s sales amounted to just $7 billion. Not surprisingly, Tesla lost $674.91 million.
Daimler is a juggernaut, but Tesla is the toast of Wall Street and a legion of true believers. You may go ahead and be entertained by Tesla and its Tweeting, starlet-dating CEO, Elon Musk. But if you want to know where the auto industry is headed, watch Daimler.