Mercedes-Benz Pivots to Practical Tech as Shares Stuck in the Slow Lane

Mercedes shifts to Level-2++ autonomous driving with Drive Assist Pro, while revenue and profit slide, stock near 52-week low, and analysts see mixed value.

Mercedes-Benz is taking a more pragmatic route in the race toward autonomous driving, unveiling its new “Drive Assist Pro” system that will hit the streets of Stuttgart and Munich by the end of 2026, with a national German rollout planned for early 2027. The Level-2++ system can steer across multiple lanes, avoid pedestrians and stop at red lights, but it still requires the driver to keep hands on the wheel and remain fully responsible. This marks a clear strategic retreat from the industry’s earlier obsession with Level-3 autonomy: rival BMW scrapped its own Level-3 project earlier this year due to feeble demand, while Mercedes itself has put its Drive Pilot program on ice. The Stuttgart-based automaker is now betting on scalable, everyday assistance features rather than chasing the dream of a truly driverless car.

The technology push comes at a delicate time for the company’s finances. First-quarter revenue fell to €31.6bn, while operating profit slumped to €1.9bn. Management still expects a stable return on sales for the full year, but the stock has paid the price for the broader headwinds. Shares closed at €49.80 on Friday, down roughly 19% since the start of January and less than 4% above the 52-week low of €47.92. A massive share buyback programme — the group has already spent €1.62bn repurchasing its own equity — has provided some support, but the short-term technical picture is flashing warning signals. The relative strength index stands above 81, deep in overbought territory, which contrasts sharply with the stock’s persistent weakness over a 12-month horizon.

Analysts remain cautious but see pockets of value. RBC’s Tom Narayan reaffirmed a “Sector Perform” rating with a price target of €56, highlighting margin potential from the AMG sub-brand, especially the new AMG GT coupe. However, he described the company’s US sales targets through 2030 as extremely ambitious, encapsulating the tension between premium-segment opportunities and headwinds in core markets. On the ownership side, Bank of America reported a 5.42% voting rights stake as of mid-May, underscoring continued institutional interest even as the stock languishes.

Operationally, the carmaker has had to deal with a recall across several model lines due to potentially faulty wheel fastenings. Workshops are inspecting affected vehicles, though the news barely moved the share price on Friday. CEO Ola Källenius, meanwhile, is banking on a sweeping product overhaul: more than 40 new models are slated for launch over the next three years, with the goal of shoring up profitability in China and the US. Management is targeting an automotive segment margin of 8–10% in the medium term, with electrified vehicle sales data expected in the current quarter acting as a key bellwether.

Technically, the stock trades about 10% below its 200-day moving average and only a whisker above its 52-week trough. The contrast between the overbought RSI reading and the underlying chart weakness is unusual, but it may reflect the heavy buyback activity propping up prices in the near term. The new Drive Assist Pro system won’t contribute a single euro to earnings for years, but it does mark a meaningful strategic pivot. Mercedes has to prove the software works flawlessly in real-world urban conditions, and the first user data from the two pilot cities will set the benchmark. For now, the market is watching whether the company can translate its premium engineering into a scalable software story that justifies a rerating above the €50 mark.