Mercedes-Benz, Bayerische Motoren Werke and Audi are adding staff and cutting summer factory breaks to boost production as demand for luxury cars returns quicker than they had planned.
Daimler AG, the parent of Mercedes, has hired 1,800 temporary workers and added Saturday shifts at German assembly plants making the SLS gull-wing sports car, GLK sport-utility vehicle and E-Class convertible, spokeswoman Dominique Albrecht said. BMW has hired 5,000 temporary workers, while Volkswagen’s Audi is adding extra shifts, the automakers said.
German luxury-car makers have been riding surging demand in China and a rebound in the US and Europe. BMW’s sales rose 11 per cent in May, buoyed by deliveries of the 5-Series sedan and Z4 roadster. Mercedes’s sales climbed 17 per cent as E-Class demand surged 84 per cent, while Audi deliveries advanced 15 per cent. BMW said the new 5-Series is sold out in all markets.
“The recovery in luxury-car demand has been a bit faster than expected as confidence returns,” said Colin Couchman, an analyst at IHS Global Insight in London. “The growth is sustainable, because these companies have continued to invest in new products and expand into new markets.”
The extra shifts are a turnaround from a year ago, when Daimler reduced hours for as many as 68,000 German employees to slash car production 23 per cent. BMW, the world’s largest maker of luxury vehicles, cut shifts for as many as 24,000 workers as it lowered output 13 per cent.
Daimler and BMW, which recorded losses in their car divisions last year, are both predicting the units will return to profit on higher sales. Audi, whose profit fell last year, is forecasting “above average” growth in results this year as it targets record sales, Chief Financial Officer Axel Strotbek said this week.
“We’re now seeing in the US that SUVs and everything else that’s big and nice-looking is being sought after again,” Strotbek said at Berlin.
Still, the rebound may be peaking, as growth slows in the US and Europe and profits are diluted by a push into small cars, like Audi’s A1 subcompact and a doubling of compact Mercedes models. UBS AG analysts downgraded Daimler today to “neutral” from “buy,” citing valuation concerns.
“The stock is now pricing a return of Mercedes to historic peak margins,” UBS’s London-based Philippe Houchois wrote in a note to clients. Starting next year, Mercedes faces “low growth” in mature markets, while higher sales of the cheaper A and B-Class models may offset demand for the renewed S-Class starting next year.
BMW, which has risen 30 per cent this year before today, lost 83.5 cents, or 2 per cent, to 40.53 euros in Frankfurt. Daimler, the second-largest luxury-car manufacturer, fell 3.8 per cent to 41.78 euros, paring its gain this year to 12 per cent. Volkswagen’s preferred shares dropped 2.4 per cent to 75.36 euros, scaling back the gain this year to 15 per cent.
Daimler, based in Stuttgart, has eliminated a three-week halt at engine factories in Berlin, Untertuerkheim and Hamburg, and hired 700 students to boost Mercedes production during summer vacation, Albrecht said. The company is discussing extra shifts at the plant that produces the A and B-Class compacts.
“The demand for our products is developing very positively,” Albrecht said. The three German Mercedes assembly plants have run at full capacity in the second quarter and overall production is nearing pre-crisis levels, she said.
