DTGHF - Daimler Truck Holding AG: Mediocre Returns Are All That Investors Should Expect
2024-05-01 07:00:01 ET
Summary
- The commercial vehicle market is mature, and won't grow faster than Real GDP.
- Although it is a market leader, Daimler Truck Holding AG's profitability and ROE lag behind its competitors, and it will likely continue to do so.
- Like all commercial manufacturers, Daimler must make major investments to transition from fossil fuels to greener forms of power.
- Daimler's strategy of entering into JVs both reduces risk and the amount of capital it must invest, but it also reduces product differentiation, and exposes it to potential price competition and lower margins in the future.
- Given that moving goods is a core function of any economy, Daimler Truck warrants a rating of Hold, but it is not a Buy.
There are few, if any, words that bring German industry to mind more than the name of Daimler. Carl Friedrich Benz designed the Benz Patent Motorcar, the first practical modern automobile put into series production in 1885. The company he founded, Benz cie, was the oldest car company in the world until it merged with Daimler Motoren Gesellschaft in 1926. North Americans are perhaps more familiar with one of its business units, Mercedes-Benz, which was named after cars that were first designed by Emil Jellinek. Jellinek named his cars after his daughter Mercedes, which is a Spanish name derived from the word for mercy. In 2007, the company shed the name DaimlerChrysler and was re-named Daimler AG, the name it had until 2021, when the company announced plans to rename itself Mercedes-Benz ( OTCPK:MBGYY ) and to spin off its heavy commercial truck unit. Daimler Truck Holding AG ( OTCPK:DTRUY ) was listed on the Frankfurt Exchange, and its first day of trading was December 10, 2021. Since that time, it has outperformed both the Dax and the S&P 500.