Traditional carmakers including Volkswagen are struggling to lift from low trading multiples even as they have started to churn out electric cars. The lack of credit from capital markets puts automakers at a disadvantage to compete with new rivals like Apple and Tesla with superior financial firepower.
Analysts said a premium automaker battling over the luxury market, by definition small and finite, could only grow so much.
Chasing Tesla
“Investors could start viewing Mercedes as a Lucid Motors or Tesla type and start to give it an EV (electric vehicle) multiple,” European auto analyst at RBC Capital Markets Tom Narayan said. “But Lucid and Tesla get to start at 100 percent EV. For Mercedes you have to convert your existing ICE (internal combustion engine) business to EVs. That may be a limitation on how far the multiple could go near-term.”
Daniel Schwarz, management director at Stifel, said valuations reflected the view that German brands were on the defensive, forced to protect their market share. “Tesla’s valuation is based on the assumption that Tesla will win market share from German manufacturers, who do not have a comparable revenue growth potential,” he said.
Kallenius is restructuring Mercedes to focus on high-end models with autonomous driving offerings aimed at boosting revenue even as the company invests billions in new technology.
Daimler’s main Mercedes-Benz division endured widespread production snarls during the third quarter of 2021 because of the chip shortage.
Deliveries recovered somewhat in the final three months of the year, but the manufacturer still lost its luxury-car sales crown to rival BMW for the first time since 2015. The company is due to report annual earnings on Feb. 24.
Daimler’s spinoff of its truck division into a separate listing ended more than a century of the businesses running under one roof.
The change is the latest in a string of structural reshuffles for the automaker that began its life as Daimler-Benz in 1926. The Mercedes brand, named after the daughter of an automobile entrepreneur, was officially adopted by Daimler in 1902.
Reuters contributed to this report
