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Daimler to Recall 744K Mercedes-Benz Wheels Over Sunroof Risks

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Daimler AG DDAIF recently announced the recall of 744,000 Mercedes-Benz vehicles in the United States over faulty sunroofs. The company will recall 2001-11 Mercedes-Benz vehicles, covering C-Class, CLK-Class, CLS-Class and E-Class model lines.

Per Daimler, the bonding between the glass panel and the sliding room frame in the affected models might not meet the requirements and lead to the detachment of sunroofs.

Dealers are expected to inspect the issue and make replacements, if necessary. Also, the owners who have already paid for the repairs will be eligible to seek reimbursements from the company.

Per the U.S. National Highway Traffic Safety Administration, the company did not submit all reports as well as failed to notify owners about some recalls at the right time. Per the terms of the settlement, Daimler will be liable to pay $13 million and faces another $7 million fine if it does not comply with the agreement.

Moreover, Daimler made an investment of more than 500 million euros in electric cars in 2019. The luxury carmaker has been hit by expensive recalls and has agreed to pay a fine of 870 million euros for violating diesel-emission regulations. The expensive shift toward EVs amid legacy diesel issues and trade disputes is affecting the makers of Mercedes-Benz vehicles.

Furthermore, in view of the rising costs, the company has outlined restructuring measures to maintain financial health. While Daimler has invested massively in recent years to develop electric and driverless cars, it now intends capex and research & development costs to be capped at 2019 levels, and reduced in the medium term. It aims to cut jobs of more than 1,000 managers, which is likely to slash costs by about 1 billion euros by the end of 2022. Prudent spending and job retrenching will aid the company in saving more than 1.3 billion euros.

Zacks Rank & Stocks to Consider

Daimler currently sports a Zacks Rank #3 (Hold). Shares of Daimler have underperformed the industry it belongs to over the past year. Its shares have appreciated 0.3% compared with the industry’s rise of 8.8%.

Some better-ranked stocks in the Auto-Tires-Trucks sector include Douglas Dynamics, Inc. PLOW, Tesla, Inc. (TSLA - Free Report) and SPX Corporation SPXC. While Douglas Dynamics flaunts a Zacks Rank #1 (Strong Buy), Tesla and SPX carry a Zacks Rank of 2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Douglas Dynamics has an estimated earnings growth rate of 10.42% for 2020. The company’s shares have surged 64.9% in a year’s time.

Tesla has a projected earnings growth rate of 1,246% for the ongoing year. Its shares have gained 32.2% over the past year.

SPX has an expected earnings growth rate of 8.09% for the current year. The stock has appreciated 86.4% in the past year.

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