Where to Find a Deal on Mercedes and BMW

livemint.com:

It is hard to find a good deal on a German car these days. Most German car stocks, on the other hand, are selling for cents on the dollar. There are solid reasons for the discrepancy: weakening consumer sentiment, trouble in China, and the ever-mounting cost of catching up with Tesla in electric vehicles.

Yet people will always want premium brands, not least in China. There may be more gas left in the tank, particularly for BMW and Mercedes-Benz, than many investors seem to think. Car watchers can expect lots of flashy vehicle previews as IAA Mobility, Germany’s answer to the Detroit auto show, revs up for its grand opening by German Chancellor Olaf Scholz on Tuesday.

One battleground might be smaller cars: BMW launched a new generation of its city-car brand Mini on Friday, while Mercedes-Benz plans to reveal a fresh approach to the compact segment Sunday. But the old rivalry between these luxury stalwarts isn’t the real story these days. Investors are more worried about new competition, notably from fast-growing EV makers such as Tesla and China’s BYD.

The latter will have six vehicles on display at IAA, including a new five-seat sport-utility vehicle. The risk is already playing out in China, where EV sales are most advanced. Volkswagen was overtaken by BYD as the Chinese market leader earlier this year.

The German giant’s EVs don’t appear to be competitive with equivalents that are developed locally with the speed and fresh thinking of startups. VW admitted defeat last month by investing $700 million in local rival Xpeng and agreeing to co-develop new models with its new partner. In a historic reversal, the German company is now having to learn from Chinese manufacturers just as they once learned from it.