2 Luxury Auto Stocks For An Improving Economy: Ferrari And Daimler AG

Ever-evolving customer preferences, next-gen connectivity, and cutting-edge design are reshaping the luxury automotive industry. The rising wealth of top earners in the U.S.  and growing populations and wealth in Asia in countries including China and India are creating a huge market for luxury automobiles. The global market for luxury cars is projected to grow at a CAGR of 9.3% over the next seven years to hit $655 billion by the end of 2027.

The increasing demand for custom, hand-built, limited-edition luxury vehicles and classic cars should drive the growth of companies in this sector.

Luxury car manufacturers Daimler AG (DDAIF - Get Rating) and Ferrari N.V. (RACE - Get Rating) already offer models that are customized for a particular socio-economic class based on income and standard of living. We expect these two stocks to deliver solid returns going forward.

Daimler AG (DDAIF - Get Rating)

Based in Germany, DDAIF is one of the world’s most successful automotive companies. With its Mercedes-Benz Cars & Vans, Daimler Trucks & Buses, and Daimler Mobility divisions, the Group is one of the leading global suppliers of premium cars and manufacturers of commercial vehicles.

Last  December, DDAIF’s Mercedes-Benz production network announced the launch of six new Mercedes-EQ Models by 2022. By 2022 the company’s portfolio will include eight all-electric Mercedes-EQ models. With this electrification of the entire product portfolio, Mercedes-Benz is targeting leadership in electric drives and vehicle software. This strategic move is intended to make Mercedes-Benz a leading player in the field of e-mobility.

Earlier this month, DDAIF announced its intention to split its industrial businesses and establish two strong and independent pure-play companies. If this plan materializes soon, the company will be able to operate more effectively, equipped with stronger net liquidity, and free from the constraints of a conglomerate structure.

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