Daimler To Discontinue Maybach Brand in 2013

CEO Dieter Zetsche announced the company will be discontinuing its ultra-luxurious Maybach brand. Zetsche was quoted as saying, "We held extensive discussions internally about which way would promise the greatest success in the luxury segment, and we came to the conclusion that the sales chances for the Mercedes brand were better than that of Maybach." This termination has been rumored for years, so it is not a surprise to us. In the long run, we think it is the right move as the company can focus more of its research-and-development dollars into the S-Class. A cooperative effort with Aston Martin had recently failed, so we think Daimler was out of options in a very competitive vehicle segment. We are leaving our fair value estimate in place and continue to believe that the European debt crisis is keeping Daimler stock well below our estimate of its intrinsic value.

We confirmed the Maybach demise with Daimler, which also told us the brand will be discontinued at some point in 2013, when the next generation S-Class is reported to be coming out. Daimler told us it "will launch additional derivatives of the S-Class," where the company expects stronger growth potential and higher returns. According to Automotive News, only 44 Maybachs have been sold in the U.S. this year through October, and prices range between about $375,000 to nearly $1.4 million. Daimler resumed Maybach production in 2002 after it was outbid in its attempt to purchase Rolls-Royce and Bentley.

The Mercedes-Benz S-Class is a series of luxury sedans produced by Mercedes-Benz, a division of Daimler AG. The classification was officially introduced in 1972 with the W116 S-Class, which succeeded previous Mercedes-Benz models dating to the mid-1950s. As the flagship of the Mercedes-Benz lineup, the S-Class has debuted many of the company's latest innovations, including drivetrain technologies, interior features, and safety systems (such as the first seatbelt pretensioners). The S-Class has ranked as the world's best-selling luxury flagship sedan,and its latest generation, the W221 S-Class, premiered in 2006 as an all-new design. As in previous iterations, the W221 S-Class is sold in standard- and long-wheelbase versions; V6, V8, V12, diesel and hybrid powertrains are offered. All models built in Mexico or sold in the United States are only available in long wheelbase.