Investors in shares of Daimler have assessed Mercedes-Benz at about €25 billion ($32.9 billion), compared with €45 billion ($59.2 billion) for BMW (Bayerische Motoren Werke AG), while the effort of Daimler AG Chairman, Dieter Zetsche, to claim the title of the largest luxury car manufacturer in the world is unsuccessful.
Daimler has a market capitalization of €42.2 billion ($55.5 billion) and, without the value of the truck division, which is the largest in the world, Mercedes market capitalization is around €22 billion ($28.9 billion), according to Bloomberg. BMW’s market capitalization is €45 billion ($58.8 billion).
“The market is saying that the prospects for Mercedes are much worse than for BMW. The market’s always right. In terms of innovation, BMW is the leader,”
said Hans-Peter Wodniok, an analyst at Fairesearch in Kronberg, Germany.
Slow growth in China, poor growth of segments such as compact sport utility vehicles and an unattractive design for young people affected Mercedes, giving a chance to BMW and Audi (a division of Volkswagen), to increase their sales advance on the market of luxury vehicles.
The Increase of the gap comes a year after Zetsche, whose contract expires at the end of 2013, has committed to increase the sales to almost double at 2.6 million vehicles by the end of the decade to regain the first position, lost by Mercedes in 2005.
The campaign had a difficult start. Zetsche has deferred the profit target of Mercedes in October, at least four years from the original target.
Mercedes profit decreased this year, and the company has initiated a cost reduction plan by 2 million until 2014. Daimler tried in 1960 to take over BMW in 1960.
“The market’s confidence in Daimler management is pretty much at rock bottom. Investors have little or no confidence that current management will be able to do what is necessary to close the gap to BMW,”
said Max Warburton, a Bernstein analyst in Singapore.
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