The fabled triangular star of a Mercedes-Benz car or van continues to appeal to the irrational parts of wealthy minds. The brand is a favorite with powerful politicians in the third world who have stacks of cash! The undisputed technical and engineering excellence still excite some drivers on the home country’s highways with their liberal speed limits. However, there is stiff competition from Audi and Volkswagen, to say nothing of manufacturers in Japan and in other countries as well.
The stock market should be grateful to India and China, which have given Daimler-Chrysler some breathing room with voluminous sales of extravagant models which would not find buyers elsewhere. The company has been successful in riding crests of double-digit economic growth in these territories, though exposure to exchange risks has not been mitigated. Even these markets will also stabilize in time, so there is little to attract new interest from the stock market, though the stock has adequate profit potential in the short-term. The prospects in matured markets are not good if one keeps the future in view.
The company has made perfunctory moves to use biological fuels such as Jatropha, but the effort lacks the momentum to propel profits on the same on the same path we have enjoyed in the past. Brands such as Dodge have suffered discrimination under German hands, and the company’s response to fierce competition in the commercial vehicles segment has been lukewarm. Daimler-Chrysler will probably have to pay a price for being better at concrete product features than at understanding subtle market changes.