A fashion change at Mercedes-Benz is a long time coming

A fashion change at Mercedes-Benz is a long time coming


Bad times for shareholders

There is still little cause for joy when it comes to Mercedes-Benz stock. The various crises of our time are burdening the company for various reasons. Recently, however, investors were more concerned about the chip crisis, which has not yet been fully resolved, and the lack of components.

Perhaps that was one of the main reasons why the sales figures of Mercedes-Benz (DE0007100000) it decreased again in the second quarter, as reported by Der Aktionär. Thus, the group delivered 490,000 vehicles in the last three months, which is 16 percent less than a year earlier. In the first half of the year, not quite a million cars came together, which corresponds to a minus of almost 15 percent.

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Poster EMH PM BusinessWhat is really piquant here: not only in the price range, which is cheap by Mercedes standards and which is just ignored anyway, sales decreased. Even for expensive sports cars from AMG, the manufacturer could not provide the amount that he would like. In China in particular, sales have fallen sharply and the Middle Kingdom remains the most important market for the automotive industry. Analysts are cautious about future prospects, but also see the possibility that the worst could be on the horizon.

Sooner or later Mercedes-Benz will be able to avoid at least one problem. The semiconductor crisis has eased significantly in recent weeks. Rumor has it that some major customers have significantly reduced their orders from TSMC, Samsung and Co. Basically, more capacity would be available there again, so that more chips would be available again for automotive use. It will take time before this is reflected in actual supply chains. At least there is an end ahead.

It goes down

However, investors were not assured by this, because the next conflicts are already on the horizon. With US inflation at record highs in June, fears of a recession are rising again. In the interior, such a situation is especially feared because of the impending energy crisis. If that happens, the sales figures for major automakers are likely to drop further, microchip or not.

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After all, most consumers should have other concerns than affording the next luxury car. Since Mercedes-Benz only wants to rely on that in the future, investors’ concerns are even greater. On Wednesday, the Mercedes-Benz segment therefore had to take a red light on the DAX. With a minus of almost 4.6 percent, the title did worse than others gathered in an already bad day and fell to 51.52 euros.

What else is coming?

On a large scale, Mercedes-Benz is again close to the decline of last week, which certainly should not be taken as a good sign. Investors can take solace in the fact that quite a few analysts continue to recommend the stock as a buy and have an average price target of EUR 87.50. In theory, this leads to a high probability of 70 percent. Whether this can also be used is another matter.

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Wikifolio Advertising BannerAs long as events are primarily driven by various conflicts and there are no signs of improvement, investors may continue to have a tough time. Above all, staying power is needed. Because the Mercedes-Benz segment will see better days again, at least the cars in these lines have no doubt. But it may be a long time before investors see any.

July 14, 2022 – Andreas Göttling-Daxenbichler

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