Mercedes Benz car
(Bloomberg) Daimler AG (DAI)’s Mercedes-Benz is falling further behind in the luxury car contest.
Burdened by a disjointed strategy in China, sluggish expansion of entry-level models and an aging S-Class sedan, the once-dominant upscale nameplate has slipped deeper into third place. The Mercedes sales gap to Volkswagen AG (VOW)’s Audi has more than doubled within a year, hampering Chief Executive Dieter Zetsche’s pledge to retake the lead.
“Mercedes’s problems are home-made problems,” said Christian Ludwig, an analyst with Bankhaus Lampe in Dusseldorf. “It’s going to be extremely difficult for Mercedes to reach the No. 1 spot. The others are not sleeping.”
Bloomberg reports Stuttgart, Germany-based Mercedes delivered 964,900 cars and sport-utility vehicles worldwide through the first nine months of 2012. The 5 percent gain failed to keep pace with rivals, meaning it lagged Audi by 132,600 vehicles, up from 53,900 a year ago. The gap to BMW widened 41 percent to 145,000 vehicles, according to data from the carmakers.
In September 2011, Zetsche sought to cap the celebrations for the automaker’s 125th anniversary by setting the goal for Mercedes to become the best-selling and most profitable luxury- car brand by 2020. At the time, he said it was “impossible” for the brand to accept being third.
One year on, Zetsche’s tone was less jubilant. He said Sept. 20 earnings before interest and taxes at the Mercedes car division would fall and not match last year’s figure. In response, the manufacturer is planning a savings drive dubbed “Fit for Leadership.” At the Paris car show last month, Zetsche didn’t reaffirm a Mercedes’s target for 2013 operating profit of 10 percent of sales.
Mercedes has been trailing since losing the top spot in the luxury-car segment to BMW in 2005. The Daimler unit’s sales will have advanced 19 percent through this year, compared with a 31 percent jump by BMW and a 70 percent surge by Audi over the past seven years, according to IHS Automotive estimates.
The failure to keep pace is reflected in the stock. Daimler’s 12 percent increase over the past 12 months trails BMW’s 18 percent gain and Volkswagen’s 44 percent surge. Daimler trades at 7.5 times estimated earnings versus 8 times for BMW.
Zetsche is seeking to reverse the trend by adding less- expensive compact models, including a four-door coupe and a sport-utility vehicle, to attract younger buyers and by expanding the range of variants of the S-Class flagship, which is in the last year of the current generation.
The new A-Class hatchback lured 700,000 people to showrooms when it went on sale last month. The company has about 70,000 orders so far for the car, which starts at almost 24,000 euros ($31,000) compared with about 17,000 euros for the segment- leading VW Golf.