Investing.com -- Bernstein downgraded Mercedes Benz Group AG (ETR:MBGn) to "Market Perform" from "Outperform" on challenges in its luxury and electric vehicle (EV) segments and uncertainty.
Sales of Mercedes’ top-tier luxury vehicles declined in 2024, while EV sales slumped 23% year-over-year. The automaker has already flagged that its 2024 passenger car margins will fall short of the expected 8-10% range, raising questions about the sustainability of its profit-focused “Economics of Desire” strategy.
Were it not for its €4.9 billion stock buyback programs in 2024, Mercedes’ stock might have fallen more than the 14% decline it recorded last year.
Reports of a €5 billion cost-cutting plan, including significant job reductions, and the upcoming launch of EVs on proprietary MMA and EA platforms, add pressure on Mercedes to deliver a clear path forward.
While Bernstein noted that another buyback program expected in May and the potential sale of its €9 billion Daimler (OTC:MBGAF) Truck stake could provide near-term support, it sees limited upside for the stock without visible improvements in execution.