China Sales to Drive Up Daimler Stock Price

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK (Trefis) -- For the first three quarters of 2011, Daimler AG (DAI) saw huge momentum and sales growth for its Mercedes-Benz brand in China. The 38% year-to-date growth follows a strong push into the Asian market in recent years.

Mercedes-Benz was the fastest-growing premium brand in China from 2007-2009. The trend continues with the SUV family delivering year-over-year growth of 115%, the M-Class growing 90% and the flagship S-Class growing 41% year over year. Daimler brands such as Mercedes-Benz, Smart, Maybach and Daimler compete globally with the likes of BMW (GR:BMW), GM (GM), Ford (F), Honda (HMC) and Toyota (TM) among others.

See our full analysis for Daimler.

Daimler Forges Ahead in China via JVs

Daimler's presence will be further strengthened by two recent joint ventures with Chinese manufacturers. Earlier this month, Daimler announced a joint venture with Beiqi Foton Motor of Chengdu province to build assembly plants for light commercial vehicles in an emerging market outside of China. This announcement came after the Chinese government's approval of a joint-venture plant by Daimler and Foton to be built within China.

Daimler's Mercedes-Benz division partnered with Chinese automaker BYD in May 2010 to design and manufacture a battery-electric vehicle, or BEV, which is on schedule to unveil a prototype in spring 2012. The venture is partially subsidized by the Chinese government and plans to capitalize on China's expected BEV demand increase over the next few years.

Despite the extremely positive current sales and upcoming projects, Daimler is getting hit hard by higher raw material prices and currency exchanges, in addition to the costs of launching these new projects and models.

Trefis predicts that the number of vehicles sold for both Mercedes-Benz and Daimler International -- the two most influential divisions on the price of Daimler stock -- will increase exponentially over the next five years. The strong vehicle sales will drive up the stock price as the global economy, and Daimler's European home market in particular, stabilize.

Trefis currently values Daimler stock at $83, a near 60% premium over the current market price.

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This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.