BMW Surges Past Daimler’s Mercedes-Benz Brand

Daimler AG fell behind a number of its European competitors during the second quarter and is now forecasting lower sales than both BMW AG and Volvo AB.

BMW has raised its 2011 sales target from 1.5 million units to 1.6 million units — double the 50,000 unit increase recently announced by Daimler.

And Volvo, the No. 2 truck maker in the world, recently reported second-quarter profit margins of 10.2 percent — 3.1 percentage points higher than the 7.1 percent operating margin reported by Daimler’s truck division.

Daimler’s Mercedes-Benz luxury division has been overtaken by Audi which became the world’s second-largest premium carmaker earlier this year.

Daimler is in the process of expanding its production capacity in China, Hungary and the United States. According to Mercedes’ CEO Dieter Zetsche, additional capacity could have helped the automaker keep pace with BMW.

Credit Suisse analyst Arndt Ellinghorst said, “Right now, the delta to Daimler’s peers is widening. That’s why the stock is underperforming.”

Still, Daimler did make progress during the second quarter. Earnings before taxes and interest rose to 2.58 billion euros, up 23 percent, and net income reached a record-high 1.7 billion euros – up 30 percent. Overall sales for Daimler were up 5 percent to 26.3 billion euros during the second quarter.

According to Zetsche, “The very good earnings trend is primarily a reflection of increased vehicle shipments by nearly all divisions.” He also expects the company’s Ebit division to exceed last year’s 7.2 billion euros in sales.

BMW, which surpassed Toyota’s Lexus brand to become the world’s largest luxury carmaker earlier this year, recently projected its automotive earnings for 2011 will increase by more than 10 percent before taxes and interest.

By comparison, Daimler’s Mercedes-Benz luxury car division reported a second quarter profit margin of 10.7 percent. The company attributes much of the growth to increased demand for its sport-utility models.

According to Ellinghorst, however, “BMW will be materially better than Mercedes.”

On July 21, Daimler announced that it plans to invest upwards of $2 billion to increase production at its Tuscaloosa, Alabama factory which makes the M-, R- and GL-Class Mercedes SUVs.

The company also hopes its refreshed M- and B-Class models will help boost sales by appealing to younger consumers. Both models are scheduled to hit showrooms this fall. Two other small SUVs are in the pipeline.

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