Daimler Truck Holding AG (DE:DTG), the owner of the Mercedes-Benz brand, aims to leverage Brazil’s growing truck rental space by launching its first truck leasing unit in the country, Reuters reported. Brazil’s market for new trucks is under pressure due to higher interest rates, tough financing, and an unfavorable economy.
Moreover, Brazil’s government has employed stricter norms on pollution emissions, leading to higher vehicle pricing. These factors have forced consumers to rent trucks rather than buy new ones.
Germany’s Daimler Truck Holding is a multinational auto manufacturer of trucks and buses. It also comprises a financing arm. It owns and operates several popular brands, such as Bharat Benz, Freightliner, Mercedes-Benz, Setra, Thomas Built Buses, and Western Star. It was a part of the former Daimler AG but was spun off into a separate unit in 2022 when the group rebranded to Mercedes Benz Group AG (DE:MBG).
Here’s Why Truck Rental in Brazil is Lucrative for DTG
Starting a truck rental unit in Brazil is viable for Daimler Truck since it already operates a bank and an insurance unit in the country. Plus, it manufactures trucks and buses in Brazil that compete with the local and international players. Some of the existing players in Brazil’s truck rental market include Vamos, Localiza Pesados, Volvo (GB:0MHW), and Traton Group’s (DE:8TRA) Scania and VWCO brands.
DTG said that it could start the rental business immediately by renting out 100 trucks. Further, it plans to have 200 trucks in rental circulation by the end of 2024 and will need to invest 200 million reais (about $40.18 million) into the business.
Commenting on the business prospects in Brazil, Cristina Rensi, director of new business at Daimler Trucks, Brazil, noted that the rental truck and bus business in Brazil had only 2% of the fleet in circulation in 2023. As a percentage of new trucks registered in the country, 10% were used for the rental market last year, and this is expected to shoot up to 14% to 15% in 2024.
Is Daimler Truck Stock a Buy?
With seven Buys versus one Hold recommendation, DTG stock has a Strong Buy consensus rating on TipRanks. The Daimler Truck Holding AG share price target of €45.57 implies 33.7% upside potential from current levels.
