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Battle of Luxury Carmakers Heats Up as Daimler Finance Arm Expects Record Year

Luxury Carmakers Heats Up

Mercedes-Benz 9% growth in revenue and 11% growth in total unit sales for passenger cars as the Asian market comes within touching distance of the Europe in terms of total sales

The battle between luxury carmakers is slowly hitting fever pitch as Mercedes completed an exception first half of the fiscal year. The German carmaker’s finance arm, Daimler Financial Services, which handles customer financing and leasing, registered a 19% increase in the first six months totalling up to $40.77 billion. Experts at TechSci Research break this down for you:

Internal Factors

Not only did Mercedes’ new business jump by 19%, their portfolio of globally financed and leased vehicles increased by 17% to 4.6 million vehicles with a total sales value of €134 billion. Q1 and Q2 sales for FY2017 have been phenomenal. Daimler suggests that Mercedes sold 595,178 units of passenger cars in Q2 FY17 versus 546,517 units in Q2 FY16 and 568,070 and 496,756 in Q1 for FY17 and FY16 respectively. In total, January-June sales for passenger cars for FY17 were at the 1,163,248 level whereas for FY16, the figures were tallied at 1,043,273. Total unit sales for passenger cars has grown at a remarkable 11% this fiscal cycle for Mercedes. The same story is repeated throughout. Daimler Group in terms of total unit sales grew at 9% from 1,445,225 in January-June FY16 to 1,576,763 for FY17.

Revenue in total for Daimler has seen an uptick of 9% to 79,934 million Euros, for January-June FY17. This revenue is generated majorly from Mercedes-Benz Cars (responsible for €46,294 million in the given time period), Daimler Trucks (€16,968 million) and Daimler Financial Services (€11,841 million).

External Factors

TechSci experts previously suggested, in an article titled India-China FastEmerging as Battleground for BMW, Mercedes, that Asia specifically would be the next target of automakers, given the kind of sustained growth that the world’s two most populous countries, India and China, are experiencing. Significant rise in prosperity levels have made China an attractive proposition for Mercedes; China sales of Mercedes-Benz cars for January-June period for FY17 totalled 304,709 units, an astonishing 35% increase from the previous fiscal. Bucking the global trend, the Asian market during the time period, grew by 26% to 415,439 units, within touching distance of European market, which grew by 7% to reach 511,836 units. The NAFTA zone contracted by 2% and the Rest of World growth rate was a commendable 7%.

It is fairly obvious that Asia has become the major growth driver for carmakers such as Mercedes and BMW and there is strong evidence to suggest that Mercedes is going out of the way to accommodate the two regional hegemons, India and China. The latter, a global manufacturing hub, saw a 47% incline in the number of locally produced vehicles (210,809 out of the 304,709 and up from 143,398 in FY16). Experts at TechSci Research suggest that the China blueprint may be adopted by the German automaker to sync in with India’s “Make in India” push to boost manufacturing. Given Asia’s stellar performance in the global economy, carmakers must be watching the India and China market very closely.

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