MB MBGYY Mercedes-Benz Group AG Loading... : Investor Sentiment and Bull/Bear Views

Arouet expects Mercedes and other German carmakers to face shrinking margins, job cuts and lost share as Chinese EV rivals advance. He states no specific trade or share-price target.

German automakers Mercedes, BMW and Volkswagen are losing ground in China, once their most important growth market, as Chinese consumers view their own electric vehicles as having better technology and faster development cycles. German companies are forced to cut costs as their huge China profits disappear and they remain in catch-up mode.

German automakers Mercedes, BMW, and Volkswagen are losing ground in their most important growth market, China. All three reported Q2 China sales declines of at least 30%. Chinese consumers now see domestic EVs as superior, with better technology and faster development cycles, leaving German brands with inferior offerings. Mercedes sold only about 2,000 units of its new electric car in H1, versus over 80,000 for a comparable Xiaomi model. The profit pool from China is disappearing, and companies are being forced into cost cuts at home because they cannot slash vehicle prices without hurting margins and stock valuations. Little evidence of a turnaround exists, and the strategy of becoming more Chinese via partnerships is falling short.