BMW is the topdog when it comes to the luxury car market and has taken the crown of being the number one luxury car maker from its German rival Mercedes Benz.
Incidentally, Mercedes Benz was the first luxury car brand that came to the masses and it was the numero uno for quite a few years. There is still a cult following for the Mercedes Benz cars but with the rise in competition, it has definitely faded away quite a bit.
Bloomberg has reported that the investors value BMW at twice of what Mercedes Benz’s worth. Daimler’s market capitalization is valued at 42.2 billion euros whereas BMW’s market capitalization has risen to 45 billion euros. But the major difference creeps in when you remove the truck business from the total market capitalization value.
Once you subtract the 17 billion euro truck business, the capitalization value dips steeply to 25 billion euros.
These reports come after their CEO Dieter Zetsche has claimed that they’ll be regaining the throne from BMW by 2020 by selling 2.6 million units.
The company lost its crown in 2005 but still had a market capitalization of 15.5 billion euros, more than BMW a couple of years back. Analysts have claimed that Mercedes is not what it used to be and would not be able to gain its position back from BMW.
BMW’s sales figures are soaring each year and they continue to expand. They have set up a new facility in Brazil, they are showcasing electric vehicles and going all guns blazing. All this is happening when Mercedes is postponing profits due to the slack earnings. Another fact from an Investor’s point of view is that Mercedes’s share has fallen by 10 percent since 1996 while BMW’s has risen by 89 percent for the same period.
Here in India also, Mercedes has been pushed to the third position below BMW and Audi in the luxury car segment. To work its way back up Mercedes is going the cost-effective way and is planning to launch more affordable cars. They launched their cheapest yet B-Class a few months back in petrol. We also know that they are planning diesel version of the Sports MPV. But the most significant launch from them is the entry level luxury hatch A-Class which has been spied on Indian soil.
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Source: Bloomberg
Richie Rich
