Munich auto show preview: Here’s what to expect from Mercedes, BMW and Volkswagen

The upcoming Munich auto show will spotlight German automakers' electric vehicle strategies, reflecting improved investor sentiment despite ongoing weakness in China. BMW is set to debut its high-volume Neue Klasse platform with the iX3, aiming for market share, while Mercedes-Benz will unveil its MB.EA platform via the GLC to reassert EV leadership, with a potential Daimler Truck Group stake sale offering a near-term catalyst. Volkswagen plans to introduce its affordable ID.2 family, though profitability concerns loom due to intensifying Chinese competition, leading UBS to maintain a positive outlook on BMW, cautious on Mercedes, and neutral on VW.

Analysis

The upcoming Munich auto show is poised to be a pivotal event for German automakers, set against a backdrop of improving investor sentiment in Europe and the U.S., though offset by persistent weakness in the Chinese market. BMW is expected to capture significant attention with the debut of its Neue Klasse platform, headlined by the iX3 all-electric SUV. With specifications including an 800 km WLTP range, 400kW charging, and a price point of €60,000-€70,000, UBS analysts believe BMW is strategically positioned to capture market share in high-volume EV segments, a current white space for the brand. In response, Mercedes-Benz aims to restart its EV momentum by unveiling the GLC, its first vehicle on the dedicated MB.EA platform, with specifications anticipated to match BMW's. However, Mercedes-Benz's outlook is complicated by a sales slump in China, creating a dependency on near-term catalysts such as a potential sale of its Daimler Truck Group stake to fund share buybacks. Volkswagen is targeting the affordable EV segment with its ID.2 family, priced from €25,000 and launching in 2026, but faces significant questions regarding profitability amid intensifying competition from Chinese OEMs. Consequently, UBS holds a positive stance on BMW, a more cautious view on Mercedes-Benz pending corporate actions, and a neutral outlook on Volkswagen due to margin uncertainty.

Key Decisions for Investors

• Investors may view BMW's Neue Klasse platform as a significant positive catalyst, as its specifications and strategic positioning are expected to drive market share gains in previously untapped high-volume EV segments.
• For Mercedes-Benz, near-term performance is highly dependent on corporate actions; investors should monitor for the execution of the Daimler Truck stake sale, as a resulting share buyback could offset negative sentiment from its sales slump in China.
• While Volkswagen's ID.2 family targets the crucial affordable EV market, it is prudent to remain cautious and focus on future margin guidance, given the significant profitability challenges posed by low-cost Chinese competition.
• The competitive dynamics suggest a potential pair trade, favoring a long position in BMW due to its clear technological and strategic momentum over a more cautious or underweight stance on Volkswagen, which faces substantial margin pressure.