Daimler Leads German ‘Havens’ as Carmakers Reel

Bloomberg
Aug 11, 2011

Daimler AG (DAI) may be better poised than Renault SA (RNO) to recover from a selloff of European auto stocks, backed by strong cash reserves and resilient demand for Mercedes-Benz cars.

High-end carmakers such as Mercedes, Bayerische Motoren Werke AG (BMW) and Volkswagen AG (VOW)’s Audi tend to weather downturns better than mass-market auto manufacturers like Renault and Fiat SpA (F), because wealthy consumers still have money to spend even when the economy slows, investors and analysts said.

“German premium-auto manufacturers are by far the best bet,” said Juergen Meyer, a fund manager with SEB Asset Management in Frankfurt. “BMW, Audi, Mercedes and Porsche are the most stable investment havens. I continue to be very relaxed” about the prospects for the largest luxury-car makers.

Investors sold auto stocks as concern that a slowdown in the global economy heightened after Standard & Poor’s downgraded the U.S.’s credit rating and the European Central Bank began buying Italian and Spanish government bonds. The Euro Stoxx Automobile and Parts Index lost 40 billion euros ($57 billion), or 21 percent, of its value this month in the 14-member index’s worst run since November 2008.
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